The European vehicle rental market is anticipated to register a CAGR of over 6% during the forecast period, 2020 - 2025.
- One of the major factors driving the growth of the passenger car rental market is the growth in the tourism industry (resulting in an increase in the number of tourists visiting the region per month) and growing business opportunities in the region.
- Additionally, factors, such as increasing regulations on vehicle emissions, advancement in vehicle safety, the introduction of driver-assist systems in vehicles, rapidly growing logistics, retail, and e-commerce sectors, have been significantly driving the demand for new advanced trucks in the European market, over the past two years (2017-2018). The above factors have equally impacted truck rental companies. They have been upgrading various systems of trucks in their rental fleet and adding new trucks in their rental fleet side-by-side, in order to capture the increasing market demand.
- Short-term leasing is likely to continue to grow during the forecast period, as it helps European businesses meet the peaks and troughs of seasonal demand by providing suitable trucks for the job at short notice, without any penalties or commitments.
- European cars are majorly rented for 24 hours, usually with a 59-minute grace period. However, vehicles are most economical when rented for a week or more than five days, with unlimited mileage.
- The intensity of competition in the European truck rental market is high, as truck rental firms and OEMs, who offer rental services have been rigorously promoting their fleet management services to customers, such as telematics, which provide optimal usage of the rental trucks with service support, document administration, cost estimates, insurances, and door-to-door services.
Key Market Trends
Growing Domestic and International Tourism in the Region
Tourism is a significant economic activity in the European Union, with a wide-ranging impact on economic growth, employment, and social development. It is a growing sector and key to the economy, as it generates more than 5% of the European Union GDP.
- In 2018, as per the UN World Tourism Organization, the international tourists' arrivals in Europe, grew by 6% from 2017.
- International tourist arrivals in Europe reached 713 million in 2018, from 628.31 million in 2017.
- The growth was driven by Southern and Mediterranean Europe (increase by 7%), Central and Eastern Europe (growth by 6%), and Western Europe (growth by 6%). The growth in Northern Europe was flat, owing to Brexit issues.
The European car rental companies cater majorly to tourists, looking to explore the destinations in their own time, with online and walk-in booking services making car rental more simple, accessible, and efficient. Furthermore, with relaxation in the issuing of visas to tourists from the relevant source markets, such as the United States, Canada, Japan, and Australia, also propelled the tourism in the country, in turn, driving the vehicle rental market.
Tourism is a growing sector in Spain and is one of the key factors driving the growth of the economy. The country has 47 UNESCO World Heritage Sites, numerous beaches on the Atlantic and Mediterranean, and countless ongoing festivals across the year, which helps gather millions of international tourists and domestic tourists.
- As per the UN World Tourism Organization, Spain registered 81.8 million international tourists during 2018.
- This helped Spain to hold the second position as the most visited country in the EU region, after France.
The Spanish vehicle rental companies cater specifically to tourists, looking to explore Spain on their own, online and walk-in booking services, making vehicle rental more straightforward, more accessible, and efficient.
The Spanish tourism industry is expected to witness slow growth in 2019, owing to the recovery of the tourism industry at Mediterranean destinations, such as Tunisia or Turkey, which, in turn, may result in slow growth in the car rental market in the country.
France is Leading European Vehicle Rental Market
France is the largest market for vehicle rental in the region, with increased demand for vehicles, for leisure and tourism purposes. The market has evolved over the years to emerge as one of the most developed markets in the region. According to a press conference with CNPA, (the car rental branch of the trade association of cars and related activities, in France), the number of car rental transactions has been increasing in the region.
In 2018, France witnessed the most considerable footfall of international tourists of 86.9 million, followed by Spain, Italy, the United Kingdom, and Germany at 81.8, 58.3, 37.7, and 37.5 million, respectively.
The number of tourists is directly proportional to the vehicle rental market, as these countries hold the top five spots in terms of market revenue.
The market for car sharing in Germany has shown a booming trend over the last two years and is further expected to continue growing during the forecast period. The sharing of operating and maintenance costs significantly reduces the burden among the consumers in a vehicle rental system and is one of the primary reasons for the growth of the German market.
The European vehicle rental market is consolidated, dominated by major players, like Avis Budget Group Inc., Enterprise Holdings Inc., Europcar, The Hertz Corporation, and SIXT SE.
Europcar, a leading player in the European vehicle rental market, made a major move by launching a new brand – InterRent in 2013, and entered into a partnership with the US car rental provider, Advantage. The company also made a strategic acquisition of a majority stake in Ubeeqo, a French startup, specializing in car sharing.
The vehicle rental market in the region has undergone a lot of mergers and acquisitions, making the top-five players a significant contributor in the vehicle rental market. Most of the big-time US rental agencies have their presence in the market throughout Europe. These companies are among the most demanded ones in the region, due to their presence throughout Europe, and readily available vehicles, in nearly all the areas.
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