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The car rental (self drive) market size is estimated to grow by USD 3.42 billion at a CAGR of 45.08% between 2023 and 2028. The expansion of the market hinges on several key factors. Firstly, there is a notable surge in interest in self-driving vehicles, driven by advancements in autonomous technology and consumer preferences for flexible transportation options. Additionally, the growth of the travel and tourism industry plays a pivotal role, with travelers seeking convenient and cost-effective means of exploring destinations at their own pace. Moreover, the rise in disposable income and the easy availability of autonomous car rentals further propel market growth, as consumers increasingly prioritize convenience and experience-driven travel experiences. These factors collectively shape the landscape for self-drive online car rentals, fostering opportunities for innovation and market expansion amidst evolving consumer trends and technological advancements.
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The market is a dynamic sector catering to both tourism and commuting needs. It offers a diverse range of options, from luxury or premium cars to economy or budget cars, SUV, MUV, Private automobiles, for short-term and long-term rentals. Urban population centers, particularly millennials, are driving the growth of the car rental sector, which extends its services to rural areas as well. With a vast fleet to choose from, the market serves both the tourism and commuting sectors, accommodating international and domestic travelers alike. Online car rental bookings via websites and mobile applications have revolutionized the industry, making it easier for customers to access services such as SUVs, MUVs, and standard vehicles. Both organized and unorganized players compete in this market, offering various booking packages for different durations, including daily packages and weekend getaways. Customers have the option to own or lease vehicles, with customized services and after-sale services enhancing the experience. Airports serve as key hubs for car rental services, providing executive cars for airport transport and catering to local usage. With affordable insurance plans and a focus on customer convenience, the market continues to thrive, offering inexpensive travel solutions for private individuals and corporate clients alike. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The growing interest in self-driving vehicles is the key factor driving the market growth. Self-driving vehicles (SDV) evolved from the pages of science fiction to a new urban reality. Several parties are already working on autonomous vehicle technology. The SDV has various features like single-lane driving on highways, autonomous driving, and autopilot in traffic jams. Nearly every major industry player, including original equipment manufacturers (OEMs), technology providers, suppliers, and regulators, has begun efforts to expand the reach of autonomous vehicle technology.
The idea of self-driving cars is also in line with the United Nations' goal of making cities safer, more resilient, more inclusive, and more sustainable. As technology takes over the driver's seat with minimal or no human intervention, intelligent traffic management is expected to make urban travel a seamless process for years to come. Like self-driving cars, robotaxis also have many customers. Hence, such factors are expected to increase the adoption of SDV, driving the growth of the self-drive online car rentals market during the forecast period.
The use of telematics in self-drive car rentals will fuel the market growth. Telematics is a revolutionary technology used in self-driving car rentals. For self-driving car rentals, telematics provides real-time data on vehicle location, speed, and status. This data can be used by car rental companies to monitor vehicle mileage and fuel consumption and identify vehicle problems before they occur. In addition, the system allows car rental companies to ensure that drivers comply with traffic rules and adhere to rental policies. The integration of telematics technology into self-driving car rentals has also greatly improved the rental process. This has enabled landlords to provide customers with an automated check-in and check-out experience while simplifying the payment process. By using telematics, car rental companies can associate vehicle usage with payments, thus avoiding misunderstandings and ensuring billing transparency.
The tendency of car rental companies to overcharge for extra days or miles, a common problem encountered by traditional car rental companies, is greatly reduced by telematics technology. Additionally, telematics has enabled car rental companies to implement more reliable and secure theft recovery systems. With the help of GPS, car rental companies can track a car's location and remotely disable it, making it harder to steal. This increases the safety of the vehicle and, ultimately the safety of the renter. Therefore, the above factors are anticipated to drive the growth of the self-drive online car rentals market during the forecast period.
The high cost of self-driving car rental can majorly impede the growth of the market. Renting a car for an expedition or vacation can be an exciting experience, but it can also be expensive, especially for a self-driving car. There are many factors driving the high cost of self-driving car rentals. One of these is the daily rental fee, which can be substantial. Prices vary by vehicle type, season, and location. Car rental prices tend to be significantly higher in popular tourist destinations and during peak travel times than in less traveled areas. Another factor contributing to high costs is compulsory insurance. Most car owners require renters to have comprehensive insurance, which can be expensive. This is because the insurance policy must cover not only the rental car but also the occupants, driver, and any other vehicle or person involved in the accident. Taxes and fees are another part of the rental cost.
Prices vary by location and may include airport taxes, local taxes, and registration fees. In addition, car owners sometimes charge additional fees for additional services such as GPS navigation system, child seat rental, and paid transponder. In addition, car rental companies often demand large security deposits. This security deposit will be held until the vehicle is returned. Finally, fuel costs are another variable that can have a big impact on the cost of self-driving car rentals. Fuel costs add up quickly, depending on the vehicle's fuel efficiency and mileage. Therefore, the above factors are expected to hinder the growth of the market during the forecast period.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Aurora Innovation Inc: The company was founded in 2017 by leaders having decades of experience in the autonomous driving industry. It offers autonomous trucking and robotaxi services.
DriiveMe Ltd: The company provides car rental and carpooling services.
The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The economy cars segment will contribute a major share of the market, as economy cars are the cheapest and most popular type of car rental, especially among budget travelers. Economy cars have less equipment and smaller engine sizes, making them more fuel efficient and less expensive. Self-driving economy cars are in high demand among individuals and businesses as they provide a reliable and convenient means of transportation. One of the main benefits of self-driving economy cars is the savings in transportation costs as it doesn't require a human driver, and car rental companies can offer low rates, making it an attractive option for those looking to save money. In addition, self-driving cars are more economical than conventional cars, saving even more on fuel costs.
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The economy cars segment showed a gradual increase in market share with USD 177.8 million in 2018. Self-driving economy cars are also beneficial for individuals and businesses that travel short distances. Compact and easy to operate, it is ideal for maneuvering on busy roads and tight parking spaces. As a result, these cars are often rented for quick errands, short business trips, and weekend getaways. Demand for self-driving economy cars is expected to continue to grow as more and more people become interested in experiencing self-driving technology and its benefits, which will drive the growth of the economy car segment in global car rentals. It is likely to drive the growth of the market during the forecast period.
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North America is estimated to contribute 36% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. North America dominates the market and accounts for a significant portion of industry revenue. The region's strong position is due to a number of factors, including the growing demand for autonomous vehicles, the presence of major market players, and supportive government regulations. Increasing demand for self-driving cars is one of the main drivers of the growth of the market in this region.
Further, Consumers are increasingly interested in experiencing the comfort and safety benefits of autonomous vehicles, especially on long journeys. This trend is boosting the demand for self-driving car rentals and may further drive the market in the coming years. In addition, North America's strong position in the market is also due to the presence of important market players in the region. Leading car rental companies such as Hertz Global Holdings Inc. (Hertz) and SIXT SE (SIXT) are already offering self-driving vehicles in their fleets. In addition, automakers such as Tesla Inc. (Tesla), Ford Motor Co. (Ford), and General Motors Co. (General Motors) have also invested heavily in self-driving technology, with self-driving cars for rental purposes.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Million " for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
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The market is experiencing a surge in demand, driven by the evolving needs of the millennial population and the expansion of mobility infrastructure. Offering a range of options from luxury to economy cars, the market caters to both short-term and long-term rentals, providing flexibility and convenience. With a focus on personal mobility and cost-effectiveness, car rental services are increasingly popular, especially in urban areas where the cost of owning personal vehicles is high. New-age startups are disrupting the market with online car rental portals and mobile applications, offering a seamless booking experience and a wide range of vehicles, including hatchbacks, sedans, SUVs, and MUVs. These platforms also provide insurance options and complementary services, ensuring a hassle-free experience for customers.
Moreover, the organized market segment dominates, with organized players offering a variety of booking packages, including daily and weekend packages, for inter-city and intra-city travel. Additionally, corporate offices and service professionals rely on car rental services for transportation needs, further driving market growth. Innovations such as Wi-Fi networks, entertainment systems, and GPS systems enhance the customer experience, making car rental an attractive option for tourists, private individuals, and corporate clients alike. With convenient vehicle pickup and drop services, extensive road and highway connectivity, and options for both local and outstation travel, the car rental (self-drive) market continues to expand, offering affordable and efficient transportation solutions.
Market Scope |
|
Report Coverage |
Details |
Page number |
160 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 45.08% |
Market growth 2024-2028 |
USD 3.42 billion |
Market structure |
Concentrated |
YoY growth 2023-2024(%) |
36.89 |
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
Performing market contribution |
North America at 36% |
Key countries |
US, Japan, Germany, France, and China |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Aspark Holidays Pvt. Ltd., Aurora Innovation Inc., Autorent Car Rental LLC, Avis Budget Group Inc., DriiveMe Ltd., Enterprise Holdings Inc., Hertz Global Holdings Inc., Localiza Rent a Car SA, Primemover Mobility Technologies Pvt. Ltd., SIXT SE, Volkswagen AG, and Zoomcar India Pvt. Ltd. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Vehicle Type
7 Market Segmentation by Mode of Booking
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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