Car Rental Market is Estimated to Witness High Growth Owing to Opportunity of Increasing International Tourism

The car rental market comprises companies that provide vehicles on rent for personal and commercial purposes. Car rentals offer mobility convenience to travelers and those who need vehicles temporarily. Major benefits of vehicle rentals include access to a wide variety of late-model vehicles, global coverage through a network of rental locations, optional extras such as GPS, one-way rentals, and no large capital expenditure or maintenance costs.

The global car rental market is estimated to be valued at US$ 133.23 billion in 2023 and is expected to exhibit a CAGR of 2.9% over the forecast period 2023-2030, as highlighted in a new report published by Coherent Market Insights.

Market Opportunity:
The opportunity of increasing international tourism is expected to drive the car rental market growth. International tourist arrivals around the world have grown rapidly from 25 million in 1950 to over 1.4 billion in 2019 according to World Tourism Organization. This growth presents a huge opportunity for car rentals as traveling tourists require rental vehicles for local transportation. Countries with strong tourism industries such as the U.S., China, Spain, France, Italy, Mexico witness high demand for rental cars. As international travel continues recovering from covid-19 impacts and more people embark on vacations globally, the car rental market stands to gain significantly.

Porter's Analysis
Threat of new entrants: The car rental market requires large investments in fleet acquisition, maintaining facilities across locations. Established brands have economies of scale which make entry difficult for new players.

Bargaining power of buyers: Buyers have moderate bargaining power due to the presence of substitutes like car sharing. However, loyalty programs and bundled offerings help established brands retain customers.

Bargaining power of suppliers: A few large automakers dominate car supply. This gives them bargaining power over rental companies on pricing and vehicle replacement cycles.

Threat of new substitutes: Alternatives like taxi cab services and ride-hailing apps pose a threat. Car sharing is also gaining popularity worldwide.

Competitive rivalry: The global market is consolidated with top operators accounting for a major share. However, local and regional players compete intensely on price and services.

SWOT Analysis
Strengths: Large fleet size and global presence help major brands achieve economies of scale. Strong brands and loyalty programs retain customers.

Weaknesses: Seasonal demand impacts profitability. Rising labour and maintenance costs squeeze margins. Dependency on vehicle suppliers makes operations vulnerable to delays.

Opportunities: Rising tourism and business travel boosts demand. Non-urban areas still offer headroom for growth. Digitalization can enhance customer experiences.

Threats: Economic slowdowns reduce leisure and business travel. Entry of ride-sharing startups. Stricter emissions rules increase replacement costs.

Key Takeaways
Global Car Rental Market Size is expected to witness high growth over the forecast period.

Regional analysis: Europe follows North America with strong growth expected in Western European countries. Germany, the U.K, France, Italy have large rental fleets catering to over 150 million travelers annually. Asia Pacific is likely to be the fastest growing regional market led by China, India and Southeast Asian countries experiencing rising incomes and mobility.

Key players: Key players operating in the car rental market are Avis Budget Group, Hertz Global Holdings, Europcar Mobility Group, Enterprise Holdings, Sixt SE. Major players focus on fleet expansion, digitalization initiatives and partnerships to strengthen global presence.

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