The global car rental market size was estimated at USD 41.68 billion in 2014. The industry growth prospects look bullish throughout the forecast period owing to a combination of numerous factors such as growing number of air travelers, increased business & leisure trips, and proliferation of smartphone apps coupled with high-speed internet.
The increasing trend of internet usage for reservations, online bookings, and customized travel trips is expected to favorably impact market growth on account of the hassle-free process along with the option of choosing the preferred automobile for customers. Smartphones have become an indispensable part of people’s lives, which has driven industry participants to develop user-friendly, content-rich mobile applications to attract potential customers.
In the wake of growing environmental concerns around the world, the need for lowering carbon dioxide emissions has increased. The International Energy Agency issues warnings pertaining to the implications of growing carbon dioxide emissions over the forecast period. Stringent emission standards in Europe, as well as Asia Pacific, are expected to boost Hybrid Electric Vehicles’ (HEVs) and electric vehicles (EV) production over the forecast period. Adherence to prescribed emission standards and increasing crude oil prices are expected to deter people from owning personal vehicles.
North America car rental market share by vehicle type, 2012-2022, (USD Billion)
Vehicle Type Insights
The car rental industry is segmented on the basis of vehicle type which includes executive, economy, and luxury cars, as well as Sports Utility Vehicles (SUVs) and Multi Utility Vehicles (MUVs). Economy car rental market accounted for over 30% of the revenue share in 2014, which can be attributed to their low-rent charges as well as lower fuel consumption as opposed to luxury vehicles, SUVs, and MUVs.
Executive, as well as luxury products, are used for corporate & leisure purposes by companies across the world. Executive vehicles are expected to witness considerable demand in the corporate sector, owing to the cost effectiveness and sophisticated features offered. Rapid globalization is expected to increase business trips across the globe, thereby propelling growth.
Luxury cars include high-end models of brands such as Audi, BMW, and Daimler. They are preferred in niche applications and are therefore not expected to exhibit high growth throughout the forecast period.
SUVs are particularly designed for terrain and rough surfaces and are preferred in the leisure sector. On account of increasing crude oil prices, SUVs are expected to lose market share, as they offer lesser mileage as opposed to other vehicles.
Airport transport segment contributed to over 40% of the revenue share in 2014, which can be attributed to the convenience offered by these services in helping passengers to commute from their place of residence, hotels or workplaces to the airport. To leverage the attractiveness of this segment, leading players emphasize on promoting their services at strategically placed airports.
Local usage includes services for local travel within defined limits. Vehicles can be used to visit localities in a particular area as per the packages selected. This helps in traveling within the city, for attending meetings, shopping trips, sightseeing, special occasions, or visiting religious places. Unlike public transport which operates in fixed schedules as well as routes, the companies are engaged in providing customers with efficient speed and hassle free service thereby saving their time.
Outstation application sector, which includes rent-a-car services to multiple cities, is expected to emerge as a lucrative industry; it is expected to grow at a CAGR of close to 12% over the forecast period. Others segment includes event transportation solutions, employee transportation solutions, and self-drive solutions. Leisure sector is expected to drive the industry owing to the rising number of business as well as cultural events.
North America holds a major share in the industry, contributing to approximately 40% of the overall revenue, a high chunk of which is derived from the air travel industry. Companies such as Enterprise, Avis Budget Group, and Hertz are expected to lay more emphasis on expanding their services to airports. Canadians have exhibited a trend to use rental cars as a test drive medium before making the final purchase.
Asia Pacific, car rental market, is expected to witness significant demand, particularly in India, on account of the availability of high-end luxury as well as economy vehicles. A major proportion of revenues are generated from low-budget rentals, on account of the cost-sensitive nature of the economy. The self-drive renting trend in India is expected to witness high growth.
Growing number of high-net-worth individuals and increasing consumer spending power, are expected to boost industry demand in the economies of Latin America and the Middle East.
Competitive Market Share Insights
Key industry players include Al-Futtaim Group, Carzonrent, Enterprise Rent-A-Car, The Hertz Corporation, Europcar, and Sixt. Companies have started integrating technologies such as On-Board Diagnostics (OBD) and Driver Behavior Monitoring (DBM) in their cars in high-end luxury and executive vehicles as well as smaller variants including hatchbacks.
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