The car rental market includes a variety of mobility options and services related to the renting of automobiles. Car rentals provide customers with a flexible option to use vehicles on an hourly, daily or monthly basis depending on their needs. This allows customers to travel freely without having to worry about ownership and maintenance of vehicles. The global car rental market is highly competitive with the presence of established international players as well as local vendors. Major players offer car rental service through their own retail locations as well as airport concessions. In addition, several new entrants are focusing on asset-light business models and providing on-demand rental services through smartphone applications and online platforms.
The global car rental market is estimated to be valued at US$ 133.23 Bn in 2023 and is expected to exhibit a CAGR of 2.9% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity
Rising demand for on-demand mobility services is expected to present lucrative growth opportunities for players in the car rental market. Customers increasingly prefer the flexibility and convenience offered by shared and on-demand mobility solutions over private vehicle ownership. Emergence of ride-hailing and rental apps has made it easy to access vehicles on-demand for short duration point-to-point trips as well as long-term usage. Major car rental companies are partnering with Transportation Network Companies (TNCs) and integrating their services onto shared mobility platforms to capitalize on this growing trend. This is expected to significantly expand their customer base and enhance revenue opportunities over the coming years.
Porter’s Analysis
Threat of new entrants: The car rental market has moderate threat of new entrants due to the high initial capital requirement needed to acquire a fleet of vehicles. However, new players can lease vehicles instead of purchasing to enter the market.
Bargaining power of buyers: The bargaining power of buyers is high in this market. Buyers have several rental car companies to choose from and can negotiate lower prices.
Bargaining power of suppliers: A few large automakers dominate the supply of vehicles to rental car companies. This gives them significant bargaining power over rental companies.
Threat of new substitutes: Transportation network companies like Uber and Ola provide substitutes but are not widespread across regions yet.
Competitive rivalry: Intense competition exists among major international players.
SWOT Analysis
Strength: Large fleet sizes and global presence of major players allow economies of scale and coverage. Extensive airport locations and brands recognition are also strengths.
Weakness: Seasonal fluctuations in demand affects utilization rates. Higher maintenance and operating costs impacts profitability.
Opportunity: Growth in tourism and business travel presents an opportunity. Emerging markets offer scope for expansion.
Threats: Economic slowdowns reduce travel volumes impacting revenues. Rising fuel costs and regulatory changes are also threats.
Key Takeaways
The Global Car Rental Market Growth is expected to witness high due to rising mobility needs and evolving customer preferences. The global car rental market is estimated to be valued at US$ 133.23 Bn in 2023 and is expected to exhibit a CAGR of 2.9% over the forecast period 2023 to 2030.
The Asia Pacific region currently dominates the market and is projected to grow at the fastest rate during the forecast period. Countries like China, India, and Indonesia will drive the regional market growth. Strong economic growth, rising standards of living, and increasing tourism are fueling demand growth. The high population in Asia provides a large potential customer base. The regional market is projected to expand at around 3.2% CAGR during the forecast period.
Key players operating in the car rental market are Avis Budget Group, Inc., SIXT SE, Enterprise Holdings, Inc., Europcar Mobility Group S.A., and the Hertz Corporation. These companies collectively hold a major share of the global market. They are focusing on expanding their fleet sizes and service touchpoints to leverage rising demand across regions.
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