Rising Popularity of Self-Drive Car Rental
Self-drive car rental refers to the services provided by numerous car rental companies to their customers by offering different types of cars on rent for a short as well as long period depending on the user’s needs.
Global Self-Drive Car Rental Market, Forecasts From 2019-2025, in US$ Billion
Source: Knowledge Sourcing Intelligence Estimates
The chart above represents the size of the global self-drive car rental market from 2019 to 2025 which shows that the market reached US$86.589 billion by the year 2025 from US$59.280 billion in 2019. The market is projected to show a considerable growth owing to the fact the propensity of consumers to spend on self-drive cars is increasing due to more convenience and comfort. Furthermore, the availability of a wide range of vehicles from economy cars to super-luxury cars is another factor that has led to an inclination of customers rented cars rather than opting for ride-hailing services and chauffeur driven services among others. One of the major factors that is propelling the business opportunities for the major market players globally is the constantly growing tourism sector around the globe. Also, medical tourism has also been increasing in many parts of the world in which people stay in a country for some days only for treatment purposes, this, in turn, is also augmenting the adoption of rented self-driven cars for their own luxury and comfort. The disposable income and the middle-class population is on the verge of increase especially across the developing economies of the world, this, has further led to an increase in the spending done by the people on vacations and short trips which is also playing a major role in shaping up the market growth during the forecast period. The pickup points for these cars can also be chosen by the customers as per their convenience and waiting times are also less. Furthermore, the growing penetration of the internet has further propelled the business growth opportunities to capture a greater market share and tap the growing potential of the market throughout the course of five years.
However, the market is expected to be restrained by the fact that the availability of substitutes such as ride-hailing, chauffeur-driven services, and availability of cheaper public transport due to which people tend to get reluctant towards driving in other countries, states or cities. The recent advent of COVID-19 is expected to slow down the market growth during the short period as numerous government restrictions have been imposed in many countries that have led to a ban on the interstate as well as international travels. Thus, a temporary halt or a slump in the tourism sector is expected to slow down the market growth to some extent in the short run. Since the duration of this pandemic is still unclear, we expect the demand for these services to remain low for a period of ten to twelve months. However, the restrictions are being lifted in many countries and traveling has been allowed in some countries. This, combined with participation by market players by offering clean and sanitized cars to attract the customers is a key factor that is expected to be responsible for the positive outlook of the market in the coming times.
Tourism Industry
One of the major factors responsible for the global self-drive car market growth is the globally expanding tourism industry. With the rapid globalization, the travel and tourism sector is on a rise around the globe. The growing disposable incomes and the increasing middle-class population especially in the developing economies of the world play a major role in bolstering the travel and tourism sector globally. Tourism is considered as one of the major contributors to the GDP in many countries of the world. the self-drive car rental market is heavily dependent on the booming travel and tourism industry in that country. This is expected to support the growth of the car rental market as travelers prefer booking cars in advance for their trips for the sake of convenience.
International Tourists Arrival to the U.S., by Country, 2014-2018 (in Millions)
Source: U.S. Department of Commerce, ITA
Also, the people spend enormously and goods and services on their trips which further shows the potential of the market to witness good growth during the forecast period. For instance, according to the International Trade Administration, Chinese tourists spent around US$35 billion on travel and tourism-related goods and services in the United States in the year 2017.
Segment Overview:
The global self-drive car rental market is segmented on the basis of vehicle type, mode of booking, and geography. On the basis of vehicle type, the segmentation of the market has been done into economy car and luxury car. On the basis of mode of booking, the market has been classified as online and offline. Furthermore, on the basis of geography, the market has been distributed into North America, South America, Europe, Middle East and Africa, and Asia Pacific.
Luxury Cars to Witness Considerable Growth
By vehicle type, the economy car segment is expected to hold a substantial market share throughout the course of the next five years owing to the fact these cards have economical rented prices and are comparatively cheaper than luxury cars. Also, an abundance of the fleet of economical cars is available with companies that further supports the significant share of this segment during the next five years. Moreover, the companies are investing heavily in the adoption of the additional fleet to meet their growing business requirements. For instance, in December 2019, Blue Bird Group announced an addition to its fleet by adding 200 electric cars to its existing fleet as a part of its strategy and commitment towards sustainable development. Furthermore, the luxury car segment is anticipated to show promising growth throughout the next five years. The growing availability of luxury fleet by companies along with the growing propensity of consumers to spend on luxury fleet is also bolstering the growth of this segment during the next five years.
