The global car rental services market was valued at USD 98 billion in 2020 and it is expected to grow at a CAGR of 4-5% from 2020 to 2027. A significant rise in the number of people taking business and leisure trips across the globe is considered a major driving factor. Based on vehicle type, the economy cars segment accounted for the largest share of over 33% in 2020 and is expected to maintain its dominance during the forecast period. However, the executive cars segment is anticipated to register the highest growth rate due to the increasing number of business travelers across the globe, specifically in developing countries. North America is leading the global car rental services market with more than 50% revenue share in 2020 followed by APAC and Europe.
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The car rental industry has witnessed significant growth in the last ten years due to the increasing penetration of online rental car booking applications. The market is emerging as one of the key segments in the global transportation industry, as car rental services not only benefit customers and rental companies but also car manufacturers. Automotive manufacturers have started leasing cars to small rental companies who increase their fleet size without making large investments.
There has been a significant increase in global travel in the last few years. Global commuters are increasingly demanding familiar, reliable, and high-quality travel services during their travel. Some regional car rental operators are attempting to leverage this trend by expanding their brand and distribution platforms on a global level. The implementation of an integrated global car rental system is expected to enable these operators to manage their widespread business operations.
Cost Drivers
Car rental services cost depends on several factors such as location, duration of travel, vehicle type, etc. The cost of rental car services can be segmented into five major categories; rental fees, registration fees, location surcharge, administration fees, and tax. Among these, rental fees is the largest cost component accounted for more than 70% of the overall cost of service. These rental fees include driver fees, fuel costs, insurance, etc. The procurement cost of car rental services have dropped by more than 20% since the beginning of the Covid-19 pandemic.
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The Covid-19 pandemic has negatively affected the global car rental services industry. Many governments were forced to temporarily stop large-scale industrial operations. Many companies have allowed their employees to work remotely from home since the beginning of the pandemic. Though few companies are starting to get back into work from the office system, the majority of companies have implemented long-term remote working strategies to reduce cost and increase productivity. These factors limit corporate travelling and are expected to reduce demand for car rental services during the forecast period.
Key Players:
- Avis Budget Group, Inc
- EuropeCar, Enterprise Holdings, Inc.
- Hertz System, Inc.
- Localiza
- Sixt
- Carzonrent India Pvt Ltd.
- Eco Rent a Car
- ANI Technologies Pvt. Ltd.
The global car rental services industry features a moderately fragmented landscape with leading players contributing less than 40% of the market share. Industry leaders are strengthening their presence through multiple mergers and acquisitions.
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