The global car rental market was valued at $60 billion in 2019. Car rental agencies have long seen steady interest, growing in popularity as increased ease of transportation has allowed for more travel. Renting a car is cost-effective and the preferred mode of transportation for many travelers. The industry has also seen a boost from app-based bookings, which have promoted growth in the car rental market at an exponential rate. The market is segmented by economy cars, executive cars, luxury cars, SUVs, and MUVs.
This is truly a global market dominated by numerous major players. Among the largest and most influential car rental companies today include French car rental company Europcar; American companies The Hertz Corporation, Enterprise Rent-A-Car, and Avis Budget Group; German-headquartered Sixt SE; and Indian car rental company Carzonrent.
As mentioned above, the COVID-19 pandemic has had a strong negative impact on this market as the spread of the virus drove travel to a halt for months on end. Hertz, for example, earned $5.3 billion in revenue in 2020. This is a nearly 50% decrease from the year prior, forcing the company to file for bankruptcy in May of last year while 700,000 cars remained idle. Meanwhile, Enterprise reported nearly $22.5 billion in global revenue in 2020, a decline from the $25.9 recorded in 2019.
Ultimately, the pandemic ended a stretch of success for many companies in the industry. Overall the US rental car market achieved an estimated $23.33 billion in revenue for 2020, which marks the lowest overall revenue since 2011.
Though it suffered a tough year, projections from market analysis company Technavio have the car rental industry bouncing back. At the very least, growth in 2021 is expected to outpace that of 2020 as the world creeps slowly toward normality. Technavio predicts the market will expand at a compound annual growth rate (CAGR) of 18% between 2021 and 2025. This will amount to incremental growth of $66.62 billion over those four years, which will mark significant steps toward recovery.
The factors that will drive this growth in the market include a renewed interest in the travel and tourism industry. Already, the Transportation Security Administration has started to see a major increase in the number of people passing through security checkpoints, signaling a return to air travel. According to the report, “the advent of intermediaries,” or rental car bookers, is also expected to trigger growth in the market. More and more startups are entering the rental car space as intermediaries, leading to stiff competition between existing and new players that will ultimately spur further growth in the market.
About the Author
Jemima is a journalist who enjoys reporting on business, particularly small business and entrepreneurship.