Global rental market expected to grow over the next ten years
31 October 2017
31 October 2017
The global car rental market is expected to expand at a compound annual growth rate (CAGR) of 6.6% over the next ten years, according to a new report.
With ownership models changing, and consumers moving from total vehicle ownership to rental or car sharing platforms, the overall rental market is expected to see a boost in its market profitability. In addition, with businesses increasing their fleets through the rental market, it is a sector that will see real investment in the years to come.
Market analysts Future Market Insights (FMI) have published a new report, providing insight into the sector based on end use, customer type, sector, booking type and vehicle type. The two main customer segments highlighted by the report are business and leisure. It is the latter segment which is likely to continue dominating the car rental market as a whole, due to the continued expansion of global tourism, rise of disposable income and improvements in rental service infrastructure. It is the leisure segment that will grow at a higher CAGR (7.8%) over the forecast period than the business segment (4.3%).
The report also divides the market into booking types, distinguishing between offline access, mobile phone apps and other types of internet access. According to the data provided, 68% of the entire market value comes from offline bookings, which includes over the counter and phone transactions. This area is also expected to remain the bigger revenue generator until 2027, even though online bookings are growing thanks to the development of smartphone apps and online comparison websites, as well as other advancements in booking technology.
Segmenting the global Car Rental Market per region, FMI forecasts that North America will still take the largest share of the global market by 2027 with 45.9% of total revenue. In 10 years’ time, Europe will account for only 11% of the global market, the report predicts.
The biggest growth potential is in Asia/Pacific (Excluding Japan); with 17.5% global market share in 2027, but good prospects to grow strongly in the medium term – to the extent that APEJ will be the critical region for the global Car Rental Market, FMI says. Growth is also predicted for Latin America, Japan and the Middle East for the forecast period.
Finally, the report suggests that of location areas, the airport rental sector has the highest predicted CAGR of 7.3% growth, above intercity and intracity locations. This is partially due to an increase in air travel for leisure and business use, as well as packages linking airline tickets to vehicle rental and a drop in overall travel prices.
In April, a Leaseurope survey found that new leasing business in Europe expanded by 11.2% in 2016, easily surpassing the 9% growth in 2015 and recording the highest annual growth rate since 2007. There was also a noteworthy increase in the outstanding portfolio of 5.6%.
Vehicle leasing expanded by 13.2% compared to 2015, really driving growth in the overall market. While equipment leasing performed more modestly in comparison, it still rose by 8.4%. The real estate leasing market grew by 0.5%, though it was mixed across countries.