Domestic and international travelers are increasing as travelling gains prominence over the last few years. The trend is set to continue into the forecast period of 2016 to 2024. Transparency Market Research notes that there is a growing demand for reliable and quality travel services as a result. It is creating growth opportunities for global car rental market players over the period. Additionally, it notes that a robust compound annual growth rate will be noted in the global car rental market, which will add to valuation in a significant manner.
Some of the notable trends, driver, developments that are shaping the future of the global car rental market over the aforementioned assessment period include the following:
- Players are highly focused on improving the size of their fleet to cater to growing demand. The demand-supply gap is therefore providing good opportunities for players. Technology is also being used to improve consumer experience. These include use of GPS, advanced music systems, connecting devices, and so on. This is paving way for notable growth in the global car rental market over the forecast period.
- Collaborations are being noted in the global car rental market with an aim to improve the size of market share gained. These also lead to consolidated market position. Premier group and Enterprise Rent-a-car collaborated in the year of 2019 in order to improve portfolio and hold on the market. It is pertinent to note here that in the year 2018, the latter collaborated with Delaware for on-demand campus transportation.
- Technological advancement also holds key. New mobility app was launched by Sixt SE in the March of the year 2019. This acts as an enabling element in access to services such as cab hailing, sharing, and renting. In 2018, Hertz Fast Lane, an online platform, was launched by Hertz Corporation in collaboration with CLEAR.
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Car Rental Market: Snapshot
The global car rental market is driven by the growing number of inbound and domestic travelers. The increasing number of air travelers is also positively impacting the growth of this market. Travelers across the globe are demanding high quality and reliable travel services for their tours. Leading car rental service providers are offering quality services and promoting their brands at airports and this is helping customers to adopt their services. Players in the market are concentrating on broadening their fleet size by including technical gadgets. Gadgets such as GPS and music systems are being used increasingly for profitability. This is expected to intensify the competition among players in the years to come.
However, the fluctuation of oil price will restrict the growth of this market. The growing price of petrol and gasoline will affect the consumer spending level and this expected to act as a challenge. On a positive note however, the rise in GDP levels and increasing disposable income of consumers will have a positive influence on the market.
North America to Lead in Car Rental Market
North America accounted for 30% of the market in 2015. In 2015, the North American market was worth US$26.40 bn. The Hertz Corp., Avis Budget Group Inc., and Enterprise Rent A Car are key companies from the U.S. and Canada. The European market for car rentals will also witness high growth during the coming years. France is expected to be a leading contributor to the European car rental market. Europe is expected to be the second lucrative regional market in the car rental market. The strengthening position of the medical tourism industry will drive the Asia Pacific market for car rentals during the period from 2016 to 2024.
Airport Transport Segment to Lead in Car Rental Market
On the basis of category, the global car rental market is segmented into local usage, airport transport, and outstation. Of these, the airport transport segment is anticipated to contribute the most to the growth of the car rental market. The increase in the number of air travelers and increasing industrialization will push the growth of this segment in the years to come. The local usage segment will trail the airport transport segment. The high increase in the demand and adoption of cab sharing and car pool services will drive the car rental services for local usage.
Information Technology to Make Car Bookings Easier
The penetration of information technology in the car rental industry has made car bookings and car reservations much simpler, reliable, easier, and safer and thus, customers are increasingly adopting these services. Stringent emissions standards by governments across countries will hamper the growth of this market. The increasing number of warnings by The International Energy Agency regarding the rising emissions of carbon dioxide will restrict the growth of this market in the years to come. International meetings and agreements are demanding mature economies and emerging nations to reduce carbon emissions. Thus, green movement has become a trend that is becoming popular. Leading companies are thus, adopting green car rentals.
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Technology Acts as Key Lever of Extracting Consumer Value for Car Rental Value Companies
Transportation services are increasingly embracing technologies that boosts consumer convenience. The drive for offering personalized transportation by car rental market players is accelerated by technological advances. The ecosystem is seemingly consolidated with car rental agencies, owners, fleet managers, and customers or end users being integrated on a common platform by technology. The rapid pace of urbanization has also brought transportation industry players to focus on expanding rental services that tend to reduce the shooting pollution levels. The fact that in recent years, urban consumers looking for convenience and luxury has looked toward car rental services market for fulfilling their needs. The proliferation of apps and the attractive offers these agencies have for the prospective consumers is driving new values in the car rental market. . The trend has been fueled by self-drive car rental companies expanding their operations.
Over the last few months, Covid-19 pandemic posed several challenges for transportation and tourism due to stringent stay-at-home norms that were imposed by governments in several economies. The repercussions were felt in the high market volatility, which severely disrupted the tourism ecosystem—the backbone of car rental services the car rental market was affected by the pandemic on numerous counts, most notably loss of market share of top stakeholders. Notable companies who suffered are Hertz, Europcar, Uber, Lyft, and Avis. Nonetheless, as tourism is quick to respond to pandemic with health and safety protocols. Such initiatives by car rental rentals services are likely to inspire consumer confidence. Evidently, they are keen on making passengers safe against the novel Coronavirus virus. This will spur the growth of the car rental market.
The car rental market is also expected to see new horizon as tourism industry players gear toward adopting frameworks that will enable them manage disaster-related market shocks in a better way. Two factors will impede the pace at which this will be done undoubtedly. The cost-containment measures being adopted by worldwide tourism sector and still-lacking consumer confidence in some of the major economies. However, the car rental industry will emerge faster on the back of governments’ norms favoring tourism.
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