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The global car rental market was valued at $78.7 billion in 2018, which is expected to reach $122.6 billion by 2024, registering CAGR of 7.9% during the forecast period (2019–2024).
Among all the regions, North America held the largest share in the global car rental market during the historical period, accounting for over 43.3% revenue in 2018. This is mainly due to the increased usage of car rental services in the U.S., fueled by increased initiatives by the service operators to optimize the services.
Dynamics of Global Car Rental Market
The key trend observed in the global car rental is the deployment of electric vehicles in car rental services. This is mainly owing to the fact that governments of several countries are taking initiatives to introduce different policies and regulations, to encourage deployment of these vehicles in the company’s fleet. Even the car rental operators are also taking initiatives in establishing electric vehicles to their fleet. Sixt SE, a car rental company, currently offers fully electric car models like the BMW i3, BMW i8, Tesla Model S, and Tesla Model X for renting purposes.
The blooming travel and tourism industry across the world is acting as the biggest growth driver for the global car rental market. According to the World Travel and Tourism Council (WTTC), in 2018, the global travel and tourism industry witnessed a growth of 3.9% over the previous year, which is higher than the total global GDP growth of 3.2%.
The car rental market is highly scattered, with huge number of organized and unorganized players operating in the market. The necessity to shift from the unorganized to the organized sector has given rise to the emergence of the online or digital car rental system, which generates great opportunities for the existing and emerging players in the market.
Segmentation Analysis of Car Rental Market
Based on vehicle type, the economy vehicle category held the largest share in the market during the historical period, accounting 54.5% share of the global market in 2018. This can be attributed to the high fuel efficiency of these cars, which encourages their adoption for car rental services, by fleet operators and individuals. Moreover, increasing gasoline prices and growing environmental concerns have driven the demand for these cars globally, as they cause low environmental impact.
When segmented on the basis of channel, the online category held the larger share in the market during the historical period, accounting for 52.0% in 2018. This dominating market share of online channel can be attributed to increasing smartphone penetration, growth in internet of things (IoT), as well as improved convenience of its usage. The online platform offers the users easy access to the service, as they can book a car of their choice, as and when required, through the company’s website or mobile app directly.
In terms of purpose, the market for personal usage generated revenue worth $48.6 billion in 2018. With the rising disposable income, people across the world are more frequently travelling to shorter trips for leisure purposes. While doing so, most of the times the customers prefer to avail car rental services, in order to reduce the additional baggage of driving their own cars.
The demand of car rental services witnessed fastest growth for airport usage. The airport usage contributed 54.9% share to the global car rental market, in 2018. And it is further expected to reach 56.1% share by 2024. This can be mainly attributed to the increasing use of airport car rental services, by the business professionals. Additionally, increasing air travel, high volume of domestic and international tourism, and rising level of disposable income in developing economies around the globe is further fuelling the growth of this category.
Geographical Analysis of Global Car Rental Market
North America is expected to be largest car rental market globally, in the forecast period. Among countries, U.S. continues to remain the largest country for car rental services market. In 2018, the usage of these services increased in several cities, fueled by increased initiatives by the service operators. For instance, Uber Technologies Inc. adopted mobile technologies and other devices to meet consumers’ personal transportation requirements, more efficiently.
Competitive Landscape of Global Car Rental Market
The car rental market is consolidated in nature with just three companies accounting for over half of the market share. Enterprise Holdings Inc. was the market leader in the global car rental market, with 30.6% share in 2018. The company is presently operating in over 100 countries across North America, Central America, South America, Europe, the Caribbean and parts of Middle East and APAC. The other two dominant players in the global car rental market are Hertz Global Holdings Inc., and Avis Budget Group Inc.
The other major players operating in the market includes Europcar Mobility Group S.A., Sixt SE, and Localiza Rent a Car SA.
Recent Strategic Developments of Major Car Rental Market Players
In recent years, major players in the car rental market have taken several strategic measures such as new service launches and partnerships to gain a competitive edge in the industry. For instance, in April 2019, Enterprise Holdings Inc. announced to launch its own car subscription service. Under this service, the customers are required to pay monthly fees to select from six different vehicle classes — small and mid-sized Sports Utility Vehicle (SUVs), full-size and premium sedans, and small and medium-sized trucks.
In March 2019, Avis Budget Group signed a deal with Etihad Aviation Group to be its exclusive car rental service provider. This deal will provide Etihad Airways Group’s guests a greater travel experience.
Key Questions Addressed/Answered in the Report