How big is the car rental industry?
The car rental industry has grown in popularity and expanded alongside the automobile industry. Interestingly, car rental has been around for over a century and thrives more and more daily.
The experts of the field suggest that the car rental market will continue to expand and reach a value of USD 126.6 billion by 2028, growing at a compound annual rate of 4.3% from 2022 to 2028.
Renting a car has become a popular way of transportation and commuting. Rental agencies offer a wide variety of vehicles to customers at cost-effective prices. Car rental enables people to explore different areas, enjoy weekend getaways, or embark on business trips with the comfort and convenience of the cheapest rental cars.
The demand for car rentals has grown exponentially due to the increasing number of people taking leisure getaways and travelling on business trips. The Internet further helped capture a broad range of customers for companies in the industry. Mobile applications, websites, and advertisements have made the experience of renting a car more convenient and easily accessible.
The global car rental industry's value was USD 98 billion in 2020. The experts anticipate the market to grow at an annual growth rate of 4.6% from 2021 to 2028.
Hassle-free online booking methods and online information management have revolutionised the car rental industry. Reliable, high-quality global travel services are always in demand. Some popular car rental companies have capitalised on this trend by implementing international car rental strategies.
One of the critical factors in popularising car rentals is the emerging trend of combining leisure with business. Bringing friends and family on corporate trips becomes more comfortable with a rented car. This option is particularly appealing for international travel, combining sightseeing with business meetings.
The car rental industry is segmented based on vehicle type, application, and region criteria.
Vehicle type segmentation includes:
- economy cars
- Executive cars
- luxury cars
According to a 2020 report, economy cars have a market advantage and hold the largest share of over 33%. The cost-effectiveness and affordability of these cars are driving factors of the rapid growth of this segment.
The increasing number of corporate travellers worldwide contributes to the growth of the executive cars segment. These sleek cars offer renters premium features at reasonably priced rates.
Based on application, the car rental industry divides into various segments:
- local usage
- airport transportation
Current increases in air travel all across the world accelerated the growth of this segment. Because of this trend, most car rental companies advertise their services at international airports. In 2020, the airport transport segment accounted for over 40% of the revenues.
The inflexibility and inconvenience of public transportation resulted in the growth of the local segment of the car rental industry. Travellers and tourists prefer car rental services for simple navigation to utilise their time and make the most of their experience.
The market size of the car rental industry in the U.S., measured by revenue, was $36.1 billion in 2022; thus, North America accounted for the largest market share.
One of the driving forces of regional growth is the rising number of leisure and business trips worldwide. Tourism can be a crucial factor in regional growth, as famous tourist destinations attract many visitors needing car rental services, thus enhancing market development.
Rise in disposable incomes and economic growth positively impact regional market growth. Expenditure on business trips has been rising and favourably influencing the car rental industry.
The car rental markets have grown exponentially in the Asia Pacific region, specifically in China and India. Continually developing economies and increasing consumer spending power in China help the growth of the regional market. In India, rising fuel and automobile prices affect the demand for car rental services.
The bottom line
Due to the increased car and fuel prices, high maintenance costs, and other inconveniences, on-demand transportation services have gained massive popularity. As a result, the car rental industry is on the rise. With its immense size and potential for development, there’s never been a better time to experience the benefits of this market yourself.
Whether travelling for pleasure or business, renting a car can provide the flexibility and convenience you deserve. Choose a car rental company with competitive prices and high-quality customer service, and you can decide which car to travel with, where to go, and how to get the best experience possible.