Rental Car Industry To Grow By 7.5 Percent In Next 5 Years
Environmental concerns may prompt switch from ownership to other vehicle options
A ResearchAndMarkets.com report released June 20 predicts that the worldwide rental car industry will experience a compound annual growth rate (CAGR) of 7.5 percent between now and 2024, citing environmental concerns as a major driver of that increase. That’s a factor that jibes with a recent story in Treehugger, that besides environmental concerns, most younger drivers in particular can’t even afford a car and for those more financially fortunate, find enough urban alternatives to get around.
According to the study, a focus on climate change is already having an effect on driving behavior, indicating that the number of cars being used has been reduced by such options as car rentals and carpooling. The report acknowledges other causes favoring car rentals like access to vehicles minus costs associated with ownership and the convenience of booking online. This year alone, most major car rentals, in particular Enterprise, Avis and Hertz have included smartphone app features from subscriptions and more diverse payment methods to the introduction of vehicle amenities and easier account management.
Although the study indicated that operational costs have increased in the market, consumers have responded by opting for more economy models than luxury lines offered in car rental fleets. That said, rental prices haven’t wavered much in years with the average fee globally pegged at around $41 a day. Efficiencies realized by increasing technological innovations have also been credited with stabilizing prices, which in 2014 saw rates rise by 2.2 percent. In 2018, those same fees went up by only 0.6 percent.
The biggest source of revenue in the car rental industry by far remains tourism, with North America (especially the U.S.) leading the pack, followed by Europe and the Asia-Pacific region. All players are taking advantage of an international grown rate of 3.9 percent in 2018 that outpaced the global economy as a whole that reported gains that same year of 3.2 percent. One contributor to the increase mentioned in the report were less stringent tourist visas to visitors wanting to vacation in such major markets as Australia, Canada, Japan and the United States, which generated additional tourism dollars as well as additional revenue in the car rental industry in those countries.
And much like U.S. consumers, international tourists also preferred booking online, which made transactions easier than renting right at the company office. The e-commerce route was deemed faster and more convenient when it came to such procedures as document verification, contract signings and preference of vehicle drop-off locations. In turn, rental locations have made great leaps in implementing the appropriate car rental software to address the jump in e-commerce.