As shown by market reports from Grand View Research and Allied Market Research the global car rental market was valued at 78.7 billion USD in 2018 and 122.6 billion USD in 2024 respectively. Grand View Research estimated a CAGR of 7.9% over the forecast period of years 2019 – 2024. Many factors have been found to affect the growth of the industry – booming travel and tourism industry, technological trends, sustainable business strategies and many more.
Keep reading for an overview of the forecasts for the industry in the upcoming years.
Overview of the forecasts
Travel and tourism
There is an upward trend in travel and tourism globally, with people spending more money on trips abroad and also traveling for business more, this is directly affecting the car rental industry and driving it. This is especially prevalent in growing economies, along with a growth in road infrastructure; the car rental market will grow exponentially.
The ever increasing global market for smartphones is propelling the rental industry. Smartphones allow access to activities once done on a PC from the palm of your hand; this has helped in creating a positive shift in car rental experience for customers. Apps have allowed easy access to the services of rental businesses, companies such as Uber, Sixt SE, and Avis have incorporated this facility to their businesses.
Value-for-money car rental services
Many small businesses are now implementing this scheme as it helps strengthen their online presence, helping to widen their customer base. Low-cost services are a great way to market your fleet and gain more reservations; this is best aimed at the leisure market as tourists are always looking for a bargain.
The trend of including electric cars into the fleet is fast picking up, and a lot of key market players like Hertz and Enterprise Rent-A-Car are implementing this. With the growing concerns over the environment and the effects of global warming, introducing electric cars to fleets show potential customers that the business supports sustainability and is conscious of environmental causes.
With technology trending on a daily, it is expected to boost the car rental industry over the period forecasted. With car manufacturers and car rental companies utilizing the many benefits of IT, customers are privileged to access improved services. Online booking facilities, automated online reservation, and car information, app integrated websites, etc., will open up more opportunities for rental businesses.
Innovative tech solutions such as IoT and telematics are key players in helping the car rental industry boom. Incorporating these into rental businesses have shown a rapid growth within the market.
Economy level cars were shown to dominate the market in 2018 at a 30.0% revenue share and will remain so over the forecasted period. Due to their compact build and cost-effectiveness, economy cars are constantly preferred for airport and intra-city traveling. It was said that airport travel revenue exceeded 35.5 million in 2018 and is expected to keep growing. Therefore many car-rental businesses have offices in and around airports.
Executive-level cars are the preferred medium of transport for corporate customers as they offer the perfect mix of sophistication and cost-effectiveness. Executive cars are expected to show the fastest growth within the forecasted timeline, due to the rise in business travelers across the globe. This is a rising trend in developing countries and is the main reason behind the market growth.
Due to an increase in leisure tourism SUVs and MUVs are also expected to experience growth in the coming years. SUVs are a common pick amongst travelers due to their ample space, as well as passenger and luggage capacity.
Luxury cars are popular in the Chinese and Indian markets, however, they have already reached maturity in developed countries – U.S. and U.K.
North America is heading the market with a revenue share of 50% in 2018 and predicted to dominate the market for the rest of the forecast period. The region is seeing an increased number of business trips, both local and international. Due to consumers’ rising preference towards rental cars and the presence of prominent service providers within North America such as Avis Budget Group, there will be an expected acceleration of revenue generation.
The Asia Pacific will be the fastest-growing regional market, expected to show a CAGR of 8% from 2019 to 2025. Over the past few years, the region has experienced economic growth and enhanced road structure. There is also a rising availability in luxury vehicles, which is currently providing a major boost to the rental market within the region. Much of the market revenue is generated from low-budget vehicles due to their cost-sensitive economies. It is also predicted that the self-driving trend will gain more traction within the coming years.
Tech is the main contributor to market growth as of now, and will only see further improvements. Innovation plays a key role in any business and it can only benefit the rental industry even more. If you are looking for state-of-the-art IT business solutions, Navotar will be your best bet!