USA Car Rentals Market Outlook to 2028

USA Car Rentals Market Overview

The USA car rentals market is valued at USD 35 billion, driven primarily by a rise in domestic tourism, increased business travel, and the growing popularity of digital and contactless transactions. The expansion of online platforms has significantly improved convenience for consumers, allowing them to book rentals with ease. Furthermore, the demand for electric and hybrid vehicles is increasing due to heightened environmental awareness.

Major U.S. cities such as New York, Los Angeles, and Miami dominate the car rental market due to high tourist influx, business travel, and robust infrastructure. These cities are also international hubs with numerous airport car rental locations, catering to both leisure and business travelers. For example, New York and Los Angeles have large rental demands driven by business conventions and international tourism.

The U.S. government introduced tax incentives under the Inflation Reduction Act of 2023 to encourage the adoption of electric vehicles (EVs). Rental car companies benefit from federal tax credits of up to $7,500 for purchasing EVs. As of 2024, major rental companies, such as Hertz and Enterprise, have announced plans to add 50,000 EVs to their fleets to take advantage of these incentives, accelerating the transition towards greener transportation solutions.

USA Car Rentals Market Segmentation

By Vehicle Type: The market is segmented by vehicle type into economy/budget cars and luxury/premium cars. Economy cars dominate the segment due to their affordability, fuel efficiency, and practicality for short-term urban rentals. Many consumers prefer these vehicles for local commutes, day trips, or when visiting congested cities where parking space is limited. Additionally, their lower rental rates and smaller carbon footprints contribute to their popularity.

By Booking Type: The market is also segmented by booking type into online access and offline access. Online bookings have a dominant share due to the increasing digital transformation of the rental industry. Consumers prefer the convenience of booking through websites and mobile apps, which offer real-time information on availability, pricing, and the ability to select or customize vehicle options. Additionally, online bookings often provide more competitive pricing and allow users to benefit from promotional deals.

USA Car Rentals Market Competitive Landscape

The market is dominated by major players such as Enterprise Holdings, Avis Budget Group, and Hertz Global Holdings, each with a strong national and international presence.

Company Name

Establishment Year

Headquarters

Fleet Size

Revenue (2023)

Digital Platforms

Global Reach

Electric Fleet

Mergers/ Acquisitions

Customer Programs

Enterprise Holdings Inc.

1957

St. Louis, Missouri

Avis Budget Group Inc.

1946

Parsippany, New Jersey

Hertz Global Holdings Inc.

1918

Estero, Florida

SIXT SE

1912

Pullach, Germany

Getaround Inc.

2009

San Francisco, CA

USA Car Rentals Market Analysis

Market Growth Drivers

Increase in Domestic Travel Demand Post- Pandemic: In 2024, domestic travel demand in the USA is experiencing significant growth due to changing travel preferences. According to data from the Bureau of Transportation Statistics, over 700 million trips were made within the country in 2023, and this number is expected to rise due to increasing preferences for short-haul domestic travel.

Tourism Recovery Boosting Car Rentals: The recovery of the tourism industry is another major growth driver for the USA car rental market in 2024. According to U.S. Travel Association, 95 million international visitors arrived in the USA in 2023, and this number is projected to reach 120 million by 2025. Many of these visitors prefer renting cars to explore the country.

Rising Demand for On- Demand Mobility Solutions: In 2024, consumers are shifting towards on-demand mobility services, including car rentals. A report by the Department of Transportation highlights that 350 million rides were completed using on-demand mobility platforms in 2023, with a substantial portion of these involving rental cars.

Market Challenges

Vehicle Shortages Due to Supply Chain Disruptions: Supply chain disruptions have created hurdles in maintaining fleet sizes for car rental companies. In 2023, data from the National Automobile Dealers Association indicated that car production was 20% lower than pre-pandemic levels, leading to a shortage of rental vehicles.

Rising Maintenance and Repair Costs: According to the American Automobile Association (AAA), the average annual maintenance cost for vehicles rose to $1,200 in 2023, an increase of 15% over the previous year. With aging fleets and increased usage due to higher demand, rental companies face increased maintenance and repair costs, which affects profitability.

USA Car Rentals Market Future Outlook

Over the next five years, the USA car rentals industry is expected to experience growth, driven by continuous advancements in digital platforms, the increasing adoption of electric vehicles, and a shift in consumer preferences toward flexible rental options.

Future Market Opportunities

Expansion of Electric Vehicle Fleets Will Continue: Over the next five years, the car rental market in the USA is expected to witness a expansion of electric vehicle (EV) fleets. According to projections by the Department of Energy, by 2028, rental companies are likely to have over 100,000 EVs in operation, as the demand for sustainable transportation solutions grows.

Increased Focus on Digital Transformation in Rental Services: In the next five years, digital platforms and mobile apps will dominate the car rental market. By 2028, an estimated 80% of rental bookings will be made via online channels, compared to 60% in 2023, according to industry estimates. Rental companies will invest heavily in improving customer experiences through digital services, including mobile key access, contactless rentals, and enhanced booking platforms.
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