Car Rental Market Size

Car Rental Market size was valued at USD 129.1 billion in 2023 and is estimated to register a CAGR of over 7% between 2024 and 2032, driven by factors such as rising travel & tourism and paradigm shift toward on-demand mobility services. With more people traveling for both business and leisure, the demand for convenient and flexible transportation options has grown. Also, the integration of technology in car rental services, such as mobile apps for booking, GPS tracking, and automated customer service, has made the rental process more efficient and appealing to customers.

Major car rental companies are investing in digital transformation and sustainability initiatives to stay competitive and meet evolving customer expectations. For instance, in June 2024, ACE Rent-a-Car enhanced its digital platform to improve the customer experience. It is focusing on streamlining the reservation process and integrating more eco-friendly vehicles into its fleet.

The growing preference for on-demand mobility services, such as car-sharing and ride-hailing, has spurred the car rental market. Consumers are increasingly seeking flexible transportation solutions without the long-term commitment of car ownership. The corporate sector's expansion, particularly in the emerging markets, has driven the demand for rental cars. Businesses often provide rental cars for their employee business trips and corporate events. Many business travelers prefer renting cars at airports for efficient and flexible transportation during their trips. As travel rebounds post-pandemic, car rental companies are strategically expanding their presence at key transportation hubs to capture the growing market.

For instance, in June 2024, Enterprise Holdings expanded its airport locations to better serve the increasing demand from air travelers. This strategic move was aimed at enhancing its presence and meeting the rising demand for car rental services at airports.

The car rental market faces numerous challenges such as price fluctuations, competition from ridesharing services, and high operational cost. Rental car prices can be volatile, fluctuating based on season, demand, and location. Additionally, car rental companies invest heavily in purchasing and maintaining a diverse fleet of vehicles. Over time, these vehicles depreciate in value, and the costs associated with regular maintenance, repairs, and eventual replacement can be substantial. These challenges are anticipated to hinder the market growth.