Automobile Rental And Leasing Market Definition
The automobile rental and leasing market consists of sales of automotive equipment renting or leasing services by entities (organizations, sole traders and partnerships) that provide passenger cars and truck/vans, utility trailer, and recreational vehicle (RV) without drivers and utility trailers. These establishments generally operate a retail store like facility for automotive equipment renting and leasing. Some automotive equipment rental and leasing companies offer short-term rental or long-term leases, while others provide both types of services.
The automobile rental and leasing industry includes establishments that rent or lease passenger cars and trucks without drivers and utility trailers. The lease of vehicles/automobiles is governed by a lease agreement or contract. A lease agreement is a future performance contract between the lessor and the lessee. A lease agreement must be in writing, and must be signed by the lessor and the lessee. The lease contract can be signed in the form of operating leasing or finance leasing.
Automobile Rental And Leasing Market Size
The global automobile rental and leasing market is expected to decline from $366.9 billion in 2019 to $239.6 billion in 2020 at a compound annual growth rate (CAGR) of -35%. The decline is mainly due to economic slowdown across countries owing to the COVID-19 outbreak and the measures to contain it. The market is then expected to recover and grow at a CAGR of 15.06% from 2021 and reach $421.3 billion in 2023. The market is expected to grow at a CAGR of 8.1% to nearly $492.6 billion by 2025, and at a CAGR of 8.0% to $723.3 billion by 2030.
Growth in the historic period resulted from increased demand for mobility, rise in consumer awareness, growth in the used car market, and emerging markets growth. Factors that negatively affected growth in the historic period were restraints on consolidation in the industry, and driving challenges with overseas travelers.
Going forward, growing popularity of electric vehicles, e-commerce, investment in big data and IoT, and blockchain penetration in automotive rentals and leasing sector will drive the growth. Factors that could hinder the growth of the automobile rental and leasing market in the future include customer service and transparency, growing popularity of on-demand taxi services, and coronavirus disease (covid-19) outbreak.
Automobile Rental And Leasing Market Drivers
The key drivers of the automobile rental and leasing market include:
Growing Popularity Of Electric Vehicles
The automobile rental and leasing market is expected to be driven by the growing sales of electric vehicles in the forecast period. Leasing is increasingly being used as a key method to drive electric vehicle sales, especially in developed markets. By offering competitive monthly payment and vehicle return options, leasing compared with other purchasing methods significantly eases consumer concerns around electric vehicle cost and technology obsolescence. In 2018, 80% of electric vehicles were sold via leasing in the US; the lease penetration in new electric vehicles is expected to increase further thus driving the market.
Automobile Rental And Leasing Market Restraints
The key restraints on the automobile rental and leasing market include:
Coronavirus Disease (COVID-19) Outbreak
Coronavirus disease (COVID-19) is an infectious disease that is caused by a newly discovered coronavirus. The disease outbreak has affected the automobile rental and leasing market across several countries in the world, and mostly in the countries where lockdown is declared to contain the disease. For instance, the US is badly hit by the coronavirus pandemic, and the car rental and leasing market has taken a serious hit due to less demand for their services. In the US, the automobile rental and leasing market is concentrated with 3 companies holding more than 94% of the market share and all the 3 companies have reported a decline in revenues due to the impact of covid-19. The 3 major companies, Avis, Hertz and Enterprise have requested the US Treasury Department to include their industry in federal plans to rescue travel companies. Avis has reported around an 80% plunge in their revenues due to travel restrictions imposed by covid-19, in April 2020. In France, the government had to intervene and underwrite loans worth €225 million, for its car rental company Europcar. We expect that the countries that have been affected with covid-19 will see a similar downturn in their automobile rental and leasing market.
Automobile Rental And Leasing Market Trends
Major trends influencing the automobile rental and leasing market include:
Big Data In Automotive Equipment Leasing
Automotive equipment leasing companies are using technologies such as big data to improve customer service and increase vehicle life. Big data is large amounts of data that can be analyzed to gain insights and drive decision making. Big data would allow the leasing company to remind the driver to book a car for its service or replace engine oil. This technology could also help leasing companies in minimizing driver risk and prevent the number of accidents, by giving the companies insights about the driving habits and whereabouts of its fleet. Companies such as Lex Autolease have been increasingly using big data to drive cost reduction and risk mitigation.
IoT In Car Rental And Leasing
The Internet of things technology is widely being used by car rental and leasing companies in the maintenance and management of fleets. Internet of things is a network of internet connected objects or devices able to collect and exchange data using embedded sensors. Using IoT technology, car leasing companies are able to access odometer and diagnostic trouble codes (DTCs) in real time that facilitates fleet maintenance. This technology is also being used by car rental companies to check fuel level information at the point of car return, eliminating the need for staff to check fuel levels manually. Further, virtual key solutions for locking and unlocking of doors help avoid management of a large number of physical keys. For example, car rental firm Hertz is implementing IoT technology to provide keyless car rental services and manage its fleet to reduce costs.
Opportunities And Recommendations In The Automobile Rental And Leasing Market
Opportunities – The top opportunities in the automobile rental and leasing market segmented by type will arise in the passenger car rental segment, which will gain $31.9 billion of global annual sales by 2023. The top opportunities in the automobile rental and leasing market segmented by mode will arise in the online segment, which will gain $75.7 billion of global annual sales by 2023. The top opportunities in the automobile rental and leasing market segmented by type of lease will arise in the open segment, which will gain $40.6 billion of global annual sales by 2023. The top opportunities in the automobile rental and leasing market segmented by end use will arise in the individual segment, which will gain $32.1 billion of global annual sales by 2023.
The automobile rental and leasing market size will gain the most in China at $8.87 billion. Market-trend-based strategies for the automobile rental and leasing market include investing in big data technology, adopting IoT technology to better manage fleet and reduce costs, adopting blockchain technology to make leasing/renting more reliable, and implementing artificial intelligence in their operations. Player-adopted strategies in the automobile rental and leasing market include expanding through acquisitions, expanding through franchisee partnerships, and driving growth through operational efficiencies.
Recommendations – To take advantage of the opportunities, the business research company recommends the automobile rental and leasing companies to focus on IoT, artificial intelligence (AI), expand in emerging markets, and provide competitively priced offerings in low-income countries to reach new users, leverage social media, and focus on customer service and transparency.
Automobile Rental And Leasing Market Segmentation
The automobile rental and leasing market is segmented by type of product and by geography.
By Type-
The automobile rental and leasing market can be segmented by type
- a) Passenger Car Rental
- b) Passenger Car Leasing
- c) Truck, Utility Trailer, And Recreational Vehicle Rental And Leasing
The automobile rental and leasing market is segmented by type into passenger car rental, truck, utility trailer, and RV (recreational vehicle) rental and leasing, and passenger car leasing. The passenger car rental market was the largest segment of the automobile rental and leasing market, accounting for 61.6% of the total in 2019. It was followed by truck, utility trailer, and RV (recreational vehicle) rental and leasing, and passenger car leasing. Going forward, the passenger car leasing segment is expected to be the fastest growing segment in the automobile rental and leasing market, at a CAGR of 6.2%.
By Type Of Mode-
The automobile rental and leasing market can be segmented by type of mode
The automobile rental and leasing market is segmented by mode into passenger online and offline. The offline market was the largest segment of the automobile rental and leasing market segmented by mode, accounting for 50.6% of the total in 2019. Going forward, the online segment is expected to be the fastest growing segment in the automobile rental and leasing market segmented by mode, at a CAGR of 9.1%.
By Type Of Lease-
The automobile rental and leasing market can be segmented by type of lease
The automobile rental and leasing market is segmented by type of lease into open and close. The open market was the largest segment of the automobile rental and leasing market segmented by type of lease, accounting for 60.2% of the total in 2019. It is also expected to be the fastest growing segment in the automobile rental and leasing market segmented by type of lease, at a CAGR of 4.3%.
By End Use-
The automobile rental and leasing market can be segmented by end use
- a) Individual
- b) Corporate
The automobile rental and leasing market is segmented by end use into industrial and corporate. The industrial market was the largest segment of the automobile rental and leasing market segmented by end use, accounting for 56.5% of the total in 2019. It is also expected to be the fastest growing segment in the automobile rental and leasing market segmented by end use, at a CAGR of 3.7%.
By Geography–
The automobile rental and leasing market is segmented into
- o North America
- o Western Europe
- UK
- Germany
- France
- Spain
- Italy
- Denmark
- Switzerland
- Ireland
- Sweden
- Netherlands
- Austria
- Belgium
- Portugal
- Norway
- Finland
- o Asia Pacific
- China
- Japan
- India
- Australia
- Philippines
- Vietnam
- Indonesia
- Malaysia
- New Zealand
- Hong Kong
- Singapore
- South Korea
- Thailand
- o Eastern Europe
- Poland
- Russia
- Romania
- Czech Republic
- o South America
- Peru
- Argentina
- Chile
- Brazil
- Colombia
- Venezuela
- o Middle East
- Saudi Arabia
- UAE
- Turkey
- Israel
- o Africa
- Nigeria
- Egypt
- South Africa
Asia-Pacific was the largest region in the global automobile rental and leasing market, accounting for 31.9% of the total in 2019. It was followed by Western Europe, North America, and then the other regions. Going forward, the fastest-growing regions in the automobile rental and leasing market will be Eastern Europe and Asia Pacific, where growth will be at CAGRs of 4.3% and 4.1% respectively. These will be followed by Western Europe and South America, where the markets are expected to grow at CAGRs of 3.6% and 3.2% respectively.
Automobile Rental And Leasing Competitive Landscape
Major Competitors are:
- • Enterprise Holdings
- • The Hertz Corporation
- • Avis Budget
- • Daimler Group
- • LeasePlan
Other Competitors Include:
- • Toyota Financial Services
- • Honda Canada Finance Inc.
- • GM Financial
- • Ford Credit
- • Ally Financial Inc.
- • EuropCar
- • Renault Eurodrive
- • Volkswagen Credit
- • Toyota Rentacar
- • Orix Auto Corporation
- • CAR Inc. (CAR)
- • ComfortDelGro
- • EHi Auto Services Co. Ltd
- • Shenzhen Timshine Car Rental Co. Ltd
- • Shouqi Car Rental Co. Ltd
- • Business Lease Group
- • KAMAZ Leasing Company
- • Scania Polska SA
- • Volvo Financial Services
- • VEB-leasing
- • Localiza Hertz
- • Unidas
- • Ouro Verde
- • Movida Car Rental
- • Al Badie Group (ABG)
- • Paramount Leasing & Car Rental LLC
- • DRD Fleet Leasing
- • PROX CAR RENTAL LLC
- • Budget
- • Barloworld Limited
- • Bidvest Car Rental
- • CHB Ltd
- • The Combined Motor Holdings Group (CMH)
- • Gage Car Hire
- • Imperial Truck Rental
- • Springs Car Wholesalers (Pty) Ltd
- • Unitrans Automotive SA