While North America holds almost half of the car rental market share, East Asia is expected to emerge as the most lucrative for companies in the car rental market, according to new research from Future Market Insights (FMI). The global car rental market was valued at USD116 billion in 2019 and is expected to expand at a compound average growth rate (CAGR) of +7.0% over the next ten years, it predicts.
The Global Car Rental Market Study from the provider of market intelligence and consulting services, highlights increasing tourism mobility in China and Japan; growing economic and infrastructural development; foreign investments; and medical tourism in China as some of the key factors expected to boost growth of the car rental market over the forecast period up to 2029.
But while developments in East Asia will be closely monitored, North America will continue to dominate the global car rental market, owing to high usage rate of car rental services by daily commuters, office-goers, and tourists in the country. Moreover, the growing trend of car sharing also boosts the usage of car rental in this region, says the report.
The global car rental market remains a fairly consolidated landscape, where a majority of car rental key players maintain their strategic focus on new innovative service offerings. The key players – Enterprise Holdings, Hertz Corporation, Europcar Group, and Sixt – continue to dominate the sector and in the US the car rental market is highly concentrated with Enterprise Rent-A-Car, Hertz Global Holdings and Avis Budget Group holding almost two thirds of the market (62% in 2018).
According to the study, the on-airport end use category accounted for the largest share of global car rentals, owing to high presence of international and domestic travellers arriving in destinations for leisure as well as business.
Mobility is an existing megatrend and car rental companies are key providers of flexible transport solutions. In the past few years, mobility has emerged as a new platform and it has been steering the car rental industry towards a much more rewarding future.
Like other industries, technology is delivering change and altering long-standing user habits. FMI says online booking platform usage, including mobile applications and other internet services will continue to dominate the car rental market during the forecast period. It predicts that the mobile applications segment is expected to see “a prolific rise with a higher CAGR in car rental” facilitated by a general preferential shift of consumers towards mobile platforms.
FMI also believes players in the global car rental market can gain significant profits by focusing on intermediate cars in addition to economic cars. Intermediate cars are defined as being bigger than ‘compact’ cars, and smaller than ‘standard’ cars. They are generally larger, but the difference in seating is negligible. “The growing popularity of car sharing coupled with the rising disposable incomes are expected to drive the demand for intermediate cars during the forecast period,” one of its analysts comments in the report.