The future of car rental services has never been brighter than it is in 2023. Whether for business or pleasure, short term or a couple of weeks, on an economy budget, or a desire to experience the magnificence of a luxury car rental service, the Car Hiring industry today caters to the specific needs and demands of its customers in the most innovative ways imaginable.
Car hiring businesses made a remarkable rebound in 2022 from the post-COVID-19 pandemic era of 2020-2021 which saw the decline and almost total collapse of the entire industry. According to recent studies, the car rental industry experienced unprecedented growth in demand in 2022 for two major reasons: rebound in 2022 from the post-COVID-19 pandemic era of 2020-2021, which saw the decline and almost total collapse of the entire industry. According to recent studies, the car rental industry experienced unprecedented growth in demand in 2022 for two major reasons:
- As society began to emerge from the confines of the COVID-19 pandemic lockdown, a renewed desire for travel and leisure vacations emerged, leading to a significant surge in the need for car rental services.
- Furthermore, the post-COVID-19 global lockdown had indirect implications for car manufacturers. Previously grappling with car production, supply, and distribution deficits, these manufacturers now faced a daunting backlog of orders. Compounded by a worldwide microchip shortage, which is vital for numerous automotive electrical operations, these companies opted to prioritize the production of luxury cars to recover the lost revenue during the pandemic.
This decision resulted in a significant shortage of mid-tier rental car brands typically favored by major car rental agencies. The combination of these factors led to a sudden and substantial increase in demand within the car rental industry, pushing prices upward, with daily rates increasing by as much as $100 in certain instances.
How it all began
Publicly available records show that Sixt, a German car rental company, became the first officially registered Car Hiring company in history in 1912, then called Sixt Car Cruises and Self Drivers. Here in the United States, Ford Livery Company started off renting out the popular Ford T models for only 10 cents/mile in 1917. In the UK, Godfrey Davies had a rental company in the 1920s, which became a part of Europcar in 1981.
How big is the Car Rental Business in 2023?
Paul Jacobs, the Executive Manager of Kayak North America, described 2022 as “a big year for car rental services, despite the shortages,” referring to the shortage in the supply of chips. Let’s put it in numbers. The United States Industry statistics put out some interesting figures recently, indicating a total of 4,318 registered car hiring service companies in the US in 2023, a 4.3% increase from the previous year and a cumulative increase of 5.3% from 2018.
On a global scale, we have figures as high as $98 billion in 2020, $104 billion in 2021, and on track to maintain a compound annual growth rate (CAGR) of 4.6% between 2021 – 2027, when it’s projected to be as huge as $147.6 billion. The North American car rental industry is also expected to grow steadily at a 3.6% CAGR. Based on the available data, an infographic highlights the trend that while luxury and executive car rental services have seen a significant increase in demand, over a third of the industry’s earnings are generated from economy car rentals. One can therefore expect the trend to continue in the coming years.
Why Car Rental Businesses are expected to keep growing throughout the decade
There are several reasons why car rental services are expected to keep expanding in the foreseeable future. The business model is tailored around servicing the needs of people who can’t have access to their cars (mostly tourists and vacation travelers), individuals who simply don’t have a car yet, and those who have their cars but, for one reason or another, can’t have access to them temporarily.
Contrary to the general opinion, it might be a lot less costly to patronize a car rental service for a month rather than outrightly leasing a car for yourself.
| Car Leasing | Car Rental |
| Higher monthly payments | Lower monthly payments |
| Extra Fees and tax | No extra fees or taxes |
| Annual inspections payments and schedules | No annual inspection obligations |
| Ideal for you if you rarely go on business or leisure travels and you mostly remain within the state for long periods | Ideal for you if you’re always on journeys and can’t get your car across to the new locations |
| You get used to the car in months | Feels like driving a new car every time you’re in town |
Factors that Determine the Profitability of a Car Rental Service
Car Hiring Requirements
In the dog-eat-dog world of car rentals, companies are bending over backward, twisting their registration rules to stay one step ahead of their rivals while sticking to local laws. It’s usually cool to rent a car from the age of 17-20, but some places draw a line in the sand at 25 years old.
Customer Satisfaction:
It’s a Journey It’s the whole deal – everything that happens before, during, and after you hand over the keys. It’s not just about delivering a shiny car, but being there with solid support once the paperwork’s signed and sealed.
In the popularity contest of 2022, customers put Enterprise, National, and Alamo on the podium, as the top three car rental services. So, what makes a rental company a hit with customers? It boils down to a few things:
- A hassle-free leasing process
- Easy-peasy registration
- Quick and on-the-ball customer service
Whether you want to roll in luxury or need an economy car for a quick trip, the choices are endless, all the way down to multi-utility vehicles.
Your service has got to be top-notch, the car in tip-top condition, and your prices need to reflect the quality. If not, rivals can slide in with rock-bottom prices and steal your customers.
In a nutshell, it’s all about Quality, Value, and Durability.
What’s Next in Car Rentals?
As our world spins faster, top car rental companies are keeping pace, ushering in cool, tech-savvy innovations to serve their customers better. Here are a few hot trends:
- Adding electric, hybrid, and self-driving cars to their fleets. As traditional car types are losing their luster, futuristic options like electric and self-driving cars are revving up.
- Turning green with a lineup of eco-friendly rentals, showing their love for the environment, and meeting growing customer interest. Companies like Green Motion are teaming up with Whizz Air to offer green rentals, and throwing in discounts to sweeten the deal.
- Upgrading their services and digital marketing to make renting a breeze. Look at Getaround, Turbo, and Uber, or contact-free platforms like Liigu. Big players like Sixt SE and Europcar have even rolled out digital mobile rental apps, giving their brands a major leg-up.
So where’s the car rental industry heading? Here are a few thoughts:
- Making inroads into markets in Asia, Europe, and North America
- As we start to put the COVID-19 pandemic in the rearview mirror and life gets back to normal, holiday spots will be buzzing with car rentals once again.
More effective platforms for booking car rental service
With the growing trend of online car rental subscription services, it’s safe to imagine that the entire car rental process will become more automated and digitized in the near future, totally eradicating the need to visit a physical rental office to have a rental car delivered at your doorstep; this is already being implemented with the development of Car Rental Management software.
Car Rental Service for Comfort and Satisfaction
The term ‘comfort’ is highly scientific as well as philosophical since it’s a reflection of growing trends which, in turn, is a mirror image of the currently available technologies. As technology improves, comfortability and service satisfaction also improves. We can hope to see the adoption of more recent automobile technologies that will drive higher customer satisfaction in car rental service businesses.
Such technologies will be centered around building fleets of energy-efficient (electric) vehicles, Cars with head-up windshield displays, Integrated Auto-drive capabilities, advanced braking and acceleration power systems, and even cars with augmented reality environments.
Uchenna is a Radiographer and Auto parts mechanic who recently got his automotive diploma as an auto repair technician, and since then, has worked on fixing various car problems.
Working as just a radiographer, Uchenna didn’t just get all the fulfillment he desired, because he truly loved doing things tilted toward cars. As a kid, he would take apart his toy cars to see how they worked and would spend hours tinkering with his bike.
So, in 2017 he made the tough decision to become an auto mechanic. He threw himself into his studies and now loves every aspect of what he does.
He gets to work with his hands, solving problems and bringing cars back to life, and sharing his knowledge and easy quick-fix guide online are all part of what makes him feel fulfilled.
