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Over the last couple of years, renting a car has become a very popular concept among millennials, including car types such as economy cars, executive cars, luxury cars, sport utility vehicles, and multi-utility vehicles. In 2022, the market will be domina
Jan, 31
2023

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Over the last couple of years, renting a car has become a very popular concept among millennials, including car types such as economy cars, executive cars, luxury cars, sport utility vehicles, and multi-utility vehicles. In 2022, the market will be domina

 

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Car rental is a service that allows people to rent cars for a variety of reasons. The service is available both online and in person. The car rental period is measured in hours or months. Individuals who do not own their own vehicles can benefit from car rental services. Car rentals include an insurance policy and a car damage service as part of their services. Other value-added services include free Wi-Fi, entertainment devices, and child safety seats. Based on the research, it can be estimated that the global car rental market is in high demand. Car rental schemes are frequently cost-effective, which increases demand. The global car rental market also reduces the number of privately owned vehicles on the road. It eventually reduces traffic and air pollution. The economical rates and ease of booking contribute to the market Growth at an exponential pace. In the era of All Things Mobility, where both carmakers and tech startup are clamouring for a piece of the ride-hailing pie, it seems like everyone is convinced that fetching a car on demand is the future. The business model for ride-sharing is at best tenuous in terms of cost vs. profitability, and the number of players trying to get in on the action has continued to tick upward. Everyone including Uber, Lyft and so on to well established OEMs such as General Motors, Ford, BMW, Daimler, and even Tesla want to be a part of this movement.

According to the research report, “Global Car Rental Market Research, 2028” published by Actual Market Research, the market stood at USD 103.79 Billion market size in 2022 which is expected to reach USD 180.75 Billion by 2028. The rise of on-demand transportation services and the low rate of car ownership among millennials are driving growth in the car rental market. However, the low rate of internet penetration in developing countries stifles market growth. Furthermore, the adoption of car rental management software is expected to provide lucrative growth opportunities for car rental market players. Rental companies such as Enterprise, Europcar, and others have also strengthened their position in the sector by expanding their vehicle rental operations in tourist airports. Despite the fact that key companies have a strong presence in the country, there have been no recent developments or active strategies implemented by them, so the van rental market in the country is experiencing slow demand.

Based on car type, the market is segregated into luxury cars, executive cars, economy cars, sports utility vehicle (SUV) car, and multi utility vehicle (SUV) car. Among them, the economy cars segment accounted for the largest share in 2022 and is expected to retain its dominance over the forecast period. Some of the prime factors driving the growth of this segment are the compact nature and cost-effectiveness of these cars. As a result, economy cars are increasingly preferred for airport and intra-city travel. As for the executive cars segment, it is anticipated to register a CAGR of over 10% from 2023 to 2028. The increasing number of business travellers across the globe, specifically in developing countries, is one of the prime factors boosting the growth of the segment. Additionally, these vehicles offer customers a combination of premium features at reasonable pricing, accelerating their demand among corporate travellers. However, sports utility vehicle (SUV) car segment is projected to grow with higher CAGR compared to other car types.

Based on the end user segmentation, the market is anticipated to be dominated by self-driven rental cars with more than half of the market share by 2028. However, chauffeur-driven segment is growing with highest CAGR for 2023-28. Furthermore, based on the rental length the market is divided into two major parts including short term and long term. Among them, short term segment is leading the market with around 65% share in 2022. The implementation of favourable government policies, along with the increasing awareness regarding environment conservation, is acting as another growth-inducing factor. Governments of both the developed and emerging economies are emphasizing on minimizing their vehicular emissions and promoting car rental services as one of the most economical modes of transportation. Enterprise Rent-A-Car, Hertz Group AG, Avis Budget Group Inc., Uber, Europcar Mobility Group S.A., Redcap Tour, ANI technologies Pvt. limited, and Sixt AG are the major car rental service providers in the global car rental industry. Hiyacar, eZhire, Assar Vehicle, Cartrast, Clonded, Stealth are some of the Start-ups for car rental market across the globe.

According to the report the market is segmented into major five regions including North America, Europe, Asia-Pacific, South America and Middle East & Africa. Among them, North America region is leading the market with more than 37% market share in 2022 with the United States being the largest market. The USA is contributing for almost 30% of the market in 2022 followed by China. North America expected to dominate the global car rental market in the forecast period. In the medium term, demand in the market is projected to be driven by growing awareness of benefits including time-saving and cost-effectiveness of vehicle rentals, as well as the growing popularity of online car rental booking applications. Additionally, expanding rental companies' vehicle rental portfolios with the newest and eco-friendly products will help the market grow even more throughout the course of the projection period. In addition to these, increased internet usage in developed nations will fuel market expansion during the projection period. Additionally, the expansion of the infrastructure in developing nations is creating new opportunities for market expansion.

As consumers prefer to rent rather than buy, the Asia-Pacific is expected to dominate the global market. The massive population of China and India, which account for more than 38% of the world's population, is a critical factor driving market growth in the region. The increasing number of billionaires in Asia Pacific can also be attributed to the growth. Exotic car rental is still a relatively new business category in the region when compared to Europe and North America; however, given the trends mentioned above, it is expected to grow significantly over the forecast period. Imported luxury cars costing more than USD 90,800 are becoming more popular in Japan among affluent individuals who are unable to travel outside of Japan due to the coronavirus outbreak but are willing to spend money. In Europe, car rentals are usually available at affordable costs and that generates a huge demand for car rentals across the region.

Additionally, the easy booking to rent a car through online or walk-in booking services is further driving the growth of the car rental market in Europe. An Increasing preference for on-Demand transportation Services and the availability of fewer parking spaces is also accelerating the growth of the market during the upcoming timeframe. Furthermore, individuals with a huge disposable income usually prefer luxury cars resulting in high demand for luxury car rentals. Furthermore, based on booking type, the online segment is expected to lead the overall market in the near future. Young consumers are becoming more interested in the online segment. The online booking option provides the consumer with a diverse selection of luxury vehicles from which to choose. Furthermore, this type of car allows for round-the-clock booking and year-round availability. It allows users to compare prices more easily and provides information on the availability of luxury cars, terms, and offers without requiring a physical inquiry.

The term car rental refers to the hiring of a passenger vehicle for self-drive, which includes cars and small vans, by both business and leisure travellers for short term duration; excluding leasing and long term rentals. The market has evolved intensely in the very recent years and is also expected to evolve in similar fashion in the near future. The number of operational cars available for short term rental in South America was calculated to be more than 345,200 vehicles in 2017. During the same year, the number of car rental transactions between a car rental company and consumers were over 16.85 Million. Manufacturers and consumers rely on various car rental schemes that are cost-effective, such as leasing cars from their owners for a period of three years and then putting these cars on rent through app-based bookings. In addition, car rentals majorly help curb the pollution level by reducing volumetric sales of owned vehicles. Moreover, with an increase in air traffic and growth in the trend of online car booking, car rentals are the preferred options for travel, as cars are the most economical and faster modes of transportation. These advantages promote growth of the car rental industry at an exponential rate.

Renting a car in the historic Middle East and Africa allows user to experience history as well as some of the world's most beautiful architecture and iconic landscapes. The Middle East and Africa awe with their millennia-old culture, idyllic holiday resorts, and dazzling luxury metropolises. Taking public transportation can be inconvenient and unpredictable. Furthermore, public transportation does not provide an end-to-end ride, which is particularly inconvenient for tourists. Expanding economies such as Oman and the United Arab Emirates have fuelled the rental car market in every Middle Eastern country. As a result of the region's declining preference for car rental, the countries' rental car demand has continued to fall. However, in the aftermath of the pandemic, as the number of tourists has increased significantly, demand for car rentals in the Middle East and Africa has increased significantly and is expected to continue throughout the forecast period. The Middle East is expected to make a significant contribution to market growth. This is due to the region's wealth and a developed travel and tourism industry.

Looking forward, the car rental industry will embrace a new era with technological innovations blooming in the next decade. In search of new business opportunities, industry leaders are actively exploring new technologies across the auto value chain, such as Autonomous Driving (AD) and smart Electric Vehicles (EVs). For example, several car rental companies, particularly Hertz, have started to employ EVs and invest in electrification. The industry is believed to be stepping into a new stage when technological innovation is the key. The surging adoption of EVs by service providers is a key market trend in the car rental industry. Governments of numerous countries are implementing policies and regulations to support the deployment of EVs for car rental services. Additionally, the companies are taking initiatives to incorporate these new-energy vehicles into their fleet. For instance, Sixt SE provides electric cars, such as Tesla Model X, Tesla Model S, BMW i3, and BMW i8, for renting purposes. The market is highly fragmented with the presence of a large number of organized and unorganized players. However, the growing necessity to switch from the unorganized to the organized sector has led to the emergence of the digital or online car rental system, which is further expanding the growth opportunities for the emerging and existing players in the market.

Car Rental Market Start-Ups:
• Getaround is an app-based peer-to-peer car sharing platform. The platform enables car owners to rent their cars to a community of drivers using their smartphones. Drivers can find the car using the app and reserve it through the app for using the car. Their app is available for iOS & Android devices.
• Zipcar is a membership-based car-sharing company that provides automobiles rentals to its members billable on an hourly or daily basis. Members are able to view vehicle availability and reserve a self-service car via the internet, iPhone app or telephone in increments as short as one hour and pay only for the time they reserve. Zipcar vehicles report their positions to a control centre using in-car technology.
• Zoomcar is an app-based self-driving car rental platform. Users can book available cars on the platform by uploading their driving license, security deposit & more. Users can also access 7 get the keys by using the mobile app. Users can make short or long trips. At the end of the ride, users have to leave the vehicle at the designated location or parking space.

Recent Developments:
• In February 2022, In February 2022, UFODrive raised 19 million US dollars in its Series A funding round. The main investors are car rental company Hertz and the private equity firm Certares. Hertz plans to use UFODrive’s digital rental and fleet management technology to operate its global electric car fleet.
• In February 2022, Udrive, the UAE’s homegrown brand providing a pay-per-minute car rental service, completed another strong funding round with investments of USD 5 million from Cultiv8 and Oman Holding International. The investment will support Udrive for the upcoming expansion in the region and enhancements of its technology.
• July 2022 - Ikenna Ordor’s luxury car rental brand ‘Starr Luxury’, announced its expansion in the U.S. It announced its start of operation in major cities such as Los Angeles, Miami, Houston, Atlanta, and Austin. Starr Luxury is known for being one of the few companies of its kind in the world to have collaboration with five-star hotels.
• July 2022 - Uber’s premium electric car service Uber Comfort Electric announced its expansion in more U.S. cities, including Las Vegas, Portland, Seattle, Denver, Baltimore, Austin, and Philadelphia.
• In November 2021, Hertz rentals partnered with Tesla Motors to supply 100,000 Model 3S by 2022, and half of these vehicles are expected to be rented out to Uber drivers.
• In April 2021, GoAir partnered with Eco Europcar and launched car rental services across 100 cities in India, including 25 airports. Through Eco Europcar, GoAirwill is offering Chauffeur-driven cars from mid to luxury car segments.
• In February 2021, Theeb Rent a Car, a Saudi-based car rental firm, expanded its car rental fleet in the Kingdom. The company's expansion strategy is to modernize and develop its fleet to offer different car brands and models to its customers.
• Sixt SE has released a smartphone app that allows company car drivers to manage their contracts with the touch of a button. From March 2021, Hertz will charge an annual membership fee for its 24/7 service, which allows members to rent cars and vans contactlessly.
• Humax announced in February 2021 that it would provide the WTC Auto Rent RAiDEA mobility service platform to Middle Eastern customers by improving technology for a round trip, free-floating, and one-way infrastructure specially designed for cars, including electric scooters, bikes, motorcycles, and cars.
• December 2021 - The UAE's Ajman Public Transport Authority (APTA) announced the availability of vehicle rental services in order to support federal institutions in establishing an equitable and comprehensive transportation system, as part of the Emirate's Vision 2021. The change is intended to make it easier for clients to receive high-quality services. This service was developed by the Transport Authority's Vehicle Rental Section as part of the premium vehicle rental services.