What are the new trends in the car rental industry?

A number of trends are influencing the car rental market, which include the transition to electric car rental vehicles, the increasing use of rental cars for leisure purposes and the incorporation of shared mobility into the car rental business model.



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Revenue in the Car Rentals market is projected to reach US$29.94bn in 2023. Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 1.52%, resulting in a projected market volume of US$31.80bn by 2027.

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In the future, rental companies may have drastically lower overhead costs as they will no longer need to purchase, store, and maintain their own fleet of cars. Moving away from a traditional rental company model, fleet owner-entrepreneurs are already becoming rental agencies of a sort.

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The most major way that ride sharing innovation is changing the automobile rental industry is by enabling businesses to enter a brand-new market. By leveraging vehicle sharing software, businesses can offer drivers who don't want to use their own vehicles rideshare-compatible vehicle rental services.

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The market size of the Car Rental industry increased 9.6% in 2022. Has the Car Rental industry in the US grown or declined over the past 5 years? The market size of the Car Rental industry in the US has grown 6.9% per year on average between 2017 and 2022.

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The Challenges with Car Rental Business
  • Driving Style. One of the major challenges that the industry faces is the driving style that the overseas drivers are most comfortable with. ...
  • Increased Level of Competition. ...
  • Booking and Pricing Management. ...
  • Brand Awareness- a Challenge.


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Enterprise Holdings remains the largest company, with an estimated 27% of global car rental sales in 2022.

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To understand the industry dynamics in the car rental market, Michael Porter`s Five Forces analysis is considered, which provides structured framework for analyzing competitive rivalry, barriers to entry, threat of substitutes, supplier power, and buyer power as shown in below chart.

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Car Rental Industry Analysis Car Rental Market size was valued at USD 122.3 billion in 2022 and is estimated to register a CAGR of 7.4% between 2023 and 2032. The proliferation of online booking platforms and user-friendly mobile applications has enhanced convenience in the car rental sector.

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That is because the shortage of semiconductor chips that has held up auto manufacturing persists, leaving rental car companies to operate with lower inventory after they sold off chunks of their fleets in the early days of the pandemic. Building that stock back up has been more difficult than expected.

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Car shortages that began in 2020 are unfortunately still a major problem. Demand for rental cars is outpacing the supply of available vehicles, so rental car prices have gone sky high.

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The global car rental market is expected to grow steadily in the coming years due to an increase in tourism, business travel, and the rising popularity of car-sharing services.

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Why are car rentals so expensive right now in 2023? Car rentals cost more than they did a few years ago due to many different factors, but primarily because of supply chain issues related to the COVID-19 pandemic.

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Below, we've mentioned a few characteristics of good rental companies that may make it easier for you to decide.
  • Cost-Effective Rentals. ...
  • Smooth Customer Services. ...
  • Discounts and Offers. ...
  • Proper Fleet Maintenance. ...
  • Convenient Vehicle Pickup.


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The monthly cost is often lower than a traditional auto loan payment. You are (usually) not responsible for repairs needed on your car for the length of the lease or rental. Renting or leasing a new-model car is cheaper than buying one.

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Economic Incidence of Car Rental Excise Taxes The demand for car rentals is perceived to be relatively inelastic. This means that consumers will be less sensitive to the change in price introduced by the tax, as they may have few options other than renting a car to get to their destination.

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The threat of substitute products or services refers to the availability of alternative products or services that can satisfy customer needs in a certain industry (CGMA, 2013). In the rental car industry, the threat of substitutes is a significant factor that can impact the potential revenues and costs of a company.

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The major rental car companies in Europe are Avis, Hertz, Budget, Europcar, and Sixt. We always book our rental car in advance.

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