Overview: The car rental industry is a multibillion dollar industry globally. Car rental sector has observed immense growth in the recent years especially in USA and countries of Europe because of rising air travel by people for business or leisure. Car rental market research reports suggest that the US car rental industry alone was the major contributor in revenue terms for this industry. Speaking in terms of competition, car rental industry has proved to be a war zone with dominant player such as Avis, Hertz, Enterprise, keeping a tight hold onto their share. Car rental industry has now focused to online mode of reservations due to cost advantage. Users can avail the services through online platforms by simple means of an application or website. Car hiring industry revolves around commercial and non commercial, renting of all sorts of cars ranging from sedans to SUVs and compact hatchbacks. The industry is expected to hit a CAGR of 17.3% during the period of 2018-2022 making more lucrative for dealers and companies to either expand or enter the market.
Outlook: Enhanced user experience through digitization, introduction of green vehicles in car fleet, enhanced technologies in car rental services and concept of self driving unlike hire driving are some major trends that impact the industry dynamics.
Enhanced GPS technology developed in the recent years has nearly transformed the dynamics of this industry. This technology has enabled companies to gather better vehicle status. For example if a company is running low on vehicles, it will check via its GPS for availability of the next vehicle. That way the customer can rent car much more quickly and easily. Enhanced GPS technology not only keeps a track of the consumer’s location but also tracks the users speed and if he/she gets a speeding ticket, it will highlight how fast the user was going. This helps the company to save on speeding tickets that user do not pay. Tracking fuel usage and thus resulting in reduced overall travel cost is one of the major advantages of the GPS. This makes the car rental industry more attractive for consumers. In contrast to other mature service providing industries, car rental industry is highly consolidated resulting in a cost disadvantage to new entrants because of lack of economies of scale.
Market Size: Car rental industry analysis suggests that it is expected to grow exponentially due to increasing urban population, rising economy and rapidly growing tourism as well as increasing disposable income. In India this industry is expected to grow at a slower rate as compared to global trends thus, resulting in a sluggish growth in revenues too. All the car companies currently do not posses GPS technology because of financial constraints. However, big market players with deep pockets are using this service to better service their consumers and also benefit themselves.
Competition: Under non commercial segment, the competition is led by Enterprise which has highest market share. On the other hand competition under commercial segment especially airport services has been hypercompetitive with Hertz emerging as the market leader. Hertz uses Neverlost as its GPS system. Avis has collaborated with company Navman to provide GPS services to its user. Enterprise too offers the services of Garmin Nuvi GPS technology to improve consumer satisfaction.
Conclusion: In India, the better days of car rental industry are yet to arrive whereas global indicators reveal that growth in developed nations of Europe and USA will be significant. Moreover GPS technology makes car rental industry favorable for both the company and the user as it has benefits for both. Majority of the companies are currently implementing this technology to have a better share in the market.
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Ankur Gupta, Head Marketing & Communications