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In this article, we will be taking a look at the biggest car rental companies in the world. To skip our detailed analysis, you can go directly to see 5 biggest car rental companies in the world.
Cars are one of the most important forms of transport all over the world, and in some parts of the world, the only real means of being able to travel. In developing countries, public transport and infrastructure is often not as comprehensive as that of a developed country. The vehicles used are often run-down while the timings are incredibly inconsistent, making it almost impossible to fully rely on public transport. Also, many areas may not even have public transportation services which means that you'll have to either walk or take a taxi regardless. Another point to consider here is that often in developing countries, the population density is quite high and the public transportation vehicles provided are insufficient to cater to the entire population which may result in public transport being overburdened, uncomfortable and unreliable.
This is one of the reasons why the car rental business is so incredibly successful. Even some of the pioneers in the business started out with just providing cars for rentals in case the person's own vehicle had been in an accident or unusable for any reason, before pivoting out to providing car rentals to travelers and businessmen. For example, even if you're traveling in a very well-developed country like Iceland, most of the places to explore in Iceland are quite far apart in distance with nothing but rugged landscape in between. This necessitates the use of car rentals to be able to do justice to the sights the country has to offer at your own convenience.
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According to Fortune Business Insights, the value of the global rental market is around $68.84 billion in 2021, and is expected to grow to $82.54 billion in 2022 and is expected to land at $137.25 billion by 2029, representing a CAGR of 7.5% from 2021 to 2029. It is also important to keep in mind that the Covid-19 pandemic has absolutely decimated the travel industry, greatly impacting the global rental market as well. In fact, the car rental market decreased by 31% in 2020 compared to 2019 and even now, with the pandemic subsiding to an extent, has not reached pre-Covid levels.
Perhaps the biggest area in which the car rental market operates is at airports. According to the International Civil Aviation Authority, there were 2,307 million fewer passengers in 2020 as compared to 2019. These passengers make up a large percentage of the total consumers of the car rental industry, and the loss of course was devastating. In the United States, the number of cars rented in 2020 were 17.3 million, compared to 44.5 million in 2019, which is a significant reduction. This resulted in many car rental companies selling off parts of their fleet, as the operating costs were too high, and the drop in revenue made it unfeasible to hold on to the entire fleet. It is important to be aware of the impact the pandemic had even if it may not have the same effect now as it did previously, as this will impact the growth of the industry and how it rebounds in the next few years.
To be able to improve their business, car rental companies need to focus on customer retention, especially those who travel frequently either for work or for pleasure, as this demographic represents the best opportunity for customer retention. Many companies are improving on their customer service by providing better technologies, a transparent process, speeding the booking process and most importantly, faster response rate to customers. A major example of this is Avis Budget Group (CAR), one of the largest car rental companies in the world, which partnered with Ford Commercial to improve efficiencies and make the rental process easier for customers.
If you've been in the market for buying or selling a car, you'll know that car prices are through the roof right now. People are paying premium amounts to purchase cars from those who've already had their units delivered, as due to global supply chain issues and lack of available parts needed for manufacture, people who've booked their vehicles are still having to wait months for delivery. Dealerships are offering incentives to customers who've leased cars from them to get the car back and sell it for a premium. This has priced out many potential customers from purchasing their own cars, and higher costs of maintenance and reduced and expensive car parking spaces have increased the demand for car rentals.
It is also interesting to note that the vast majority of people renting a car prefer to rent an economy car, which is a compact, fuel efficient car and hence, provided sufficient comfort while also being easy on the pocket. The economy car takes up over 36% of the total market share, followed by the executive car segment, which consists of cars with premium options but is still not too expensive. This is followed by luxury cars, which are premium models of premium brands, and with the rising middle class in India and China, the demand for luxury cars is consistently increasing.
Unsurprisingly, North America is the biggest market for rental cars, worth $23.39 billion. There are multiple reasons for this, one of which is that people in North America generally have higher disposable income and can afford to rent cars. Also, if we consider the United States in particular, many cities are built with cars in mind, and so, walkability and public transport is greatly compromised, as opposed to say Europe, where most countries and cities have laid great emphasis on the availability and reliability of public transport, and hence, where demand for rental vehicles may not be as high.
To determine the biggest car rental companies in the world, we initially consulted the companies as mentioned by Fortune Business Insights as the biggest players in the industry. We then checked the annual reports and official websites of these companies to determine their fleet size, revenue and number of employees. Where the revenue was in a foreign currency, we converted it to USD to ensure the data remained consistent across all companies. We finally assigned 40% weightage to revenue and fleet each, and 20% to the number of employees. This has allowed us to come up with accurate rankings for each company. So without further ado, let's take a look at the companies you will most likely be renting from in your next travels, starting with number 9:
9. Toyota Rent a Car
Total revenue in the latest financial year (in millions): N/A
Total number of vehicles in fleet: N/A
Total number of employees: N/A
While mentioned in Fortune Business Insights, there aren't any separate statistics available for Toyota Rent a Car, operated by Toyota Motor Corporation (NYSE:TM). We even checked the annual report of Toyota Motor Corporation (NYSE:TM) but were unable to find any separate data regarding its rental business, and so, gave it the last place automatically.
8. Car Inc.
Total revenue in the latest financial year (in millions): $525.7
Total number of vehicles in fleet: 109,688
Total number of employees: 5,132
Car Inc. is the biggest car rental company in China, and claims to have a fleet bigger then the next 19 car rental companies in China combined, with operations in 70 cities in the country. The company provides on-demand chauffeured car service in more than 60 cities.
7. Localiza Rent a Car
Total revenue in the latest financial year (in millions): $1,666
Total number of vehicles in fleet: 219,406
Total number of employees: 7,582
Localiza Rent a Car is a Brazilian company and is the biggest car rental company in Latin America. The company has close to 600 branches across 9 countries, having operations in Chile, Colombia, Uruguay, Paraguay, Ecuador and Argentina. The company currently has several brands in its fleet including Volkswagen, Chevrolet, Renault and Fiat.
6. Lotte Rental Co. Ltd.
Total revenue in the latest financial year (in millions): $1,744
Total number of vehicles in fleet: 240,000
Total number of employees: 1,920
Lotte Rental is a South Korean company, which has made major strides in the car rental industry, Lotte Rental is Asia's biggest car rental company.
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Disclosure: None. 9 biggest car rental companies in the world is originally published at Insider Monkey.
