Car Rental Market Size, Share, Growth, Trends, and Global Industry Analysis: By Car Type (Economy Cars, Luxury Cars, Executive Cars, SUVs, Vans, Others), By Rental Duration (Short-term, Long-term), Booking Mode (Online, Offline), By Application (Leisure/Tourism, Business), and Region Forecast 2020-2031

Car Rental Market size was valued at US$ 150.3 billion in 2024 and is expected to reach US$ 278.3 billion by 2031, growing at a significant CAGR of 8.7% from 2025-2031. Moreover, the U.S. market is projected to grow at 9.2% by 2031. The car rental market refers to the industry segment that offers vehicles on a temporary basis to individuals or businesses, typically ranging from a few hours to several weeks. These services are provided through various channels, including airport-based, off-airport, and online platforms. Customers can rent different types of vehicles such as economy cars, luxury cars, SUVs, or vans depending on their needs. The market operates through several models including short-term rentals, long-term leasing, and subscription-based services. Key stakeholders in the market include rental agencies, leasing companies, automakers, and online aggregators. The industry plays a crucial role in mobility solutions, offering flexible and cost-effective alternatives to vehicle ownership, particularly for travelers, urban dwellers, and businesses.

The global car rental market has experienced steady growth over the years, driven by increasing tourism, rising urbanization, and the growing need for on-demand transportation. As of recent years, the market has seen significant transformation with the integration of digital platforms, mobile apps, and fleet management technologies, making the rental process more convenient and user-friendly. The rise of electric vehicles (EVs), focus on sustainability, and evolving customer preferences have also reshaped fleet strategies. North America and Europe currently dominate the market due to well-established infrastructure and strong travel demand, while the Asia-Pacific region is witnessing rapid expansion due to growing middle-class populations and increased business travel. Post-pandemic recovery and the expansion of ride-sharing models have also contributed to the industry's renewed momentum, positioning car rentals as a critical component of the evolving global mobility ecosystem.

Facts & Figures

• Over 70% of car rental bookings globally are now made through online platforms or mobile apps.
• Economy cars account for more than 40% of the total rented vehicle fleet across major markets.
• Short-term rentals contribute to over 60% of total rental transactions worldwide.
• In the U.S., over 2 million rental vehicles are active in service at any given time.
• Airport rental locations make up nearly 50% of all rental revenues globally.
• More than 30% of car rental customers now prefer self-drive options over chauffeur-driven services.

Key Developments

• In April 2025, GoWheelo, India's leading two-wheeler rental aggregation platform, announced the launch of its new vertical for car rentals, marking a significant milestone in its growth journey. This expansion is accompanied by an updated brand identity, reflecting the company’s evolving vision of positioning itself as a comprehensive urban mobility partner, moving beyond two-wheelers to offer broader transportation solutions.
• In December 2024, Zoomcar Holdings, Inc., a leading car-sharing marketplace in India, launched Zoomcar Cabs as a pilot initiative in Bengaluru. This new service offers chauffeur-driven commercial cars at competitive prices, expanding the company’s portfolio beyond its established self-drive offerings. The move reflects Zoomcar’s strategic commitment to diversifying its services and delivering enhanced customer convenience and flexibility in urban mobility solutions.

Car Rental Market Segmentation

Based on the car type

• Economy Cars
• Luxury Cars
• Executive Cars
• SUVs
• Vans
• Others

Among the various car types, economy cars are anticipated to lead the car rental market due to their affordability, fuel efficiency, and high demand from budget-conscious travelers and daily commuters. These vehicles cater to a broad customer base, including tourists, students, and small businesses seeking cost-effective mobility solutions. In both developed and emerging markets, economy cars dominate short-term rental preferences because they offer lower rental rates and operational costs. With rising fuel prices and growing urban congestion, consumers increasingly favor compact, efficient vehicles. As a result, economy cars continue to be the most preferred choice, driving significant market share within the rental industry.

Based on the rental duration

• Short-term
• Long-term

Based on rental duration, short-term rentals are expected to lead the car rental market due to their flexibility, convenience, and widespread use in both leisure and business travel. These rentals typically range from a few hours to a few days, making them ideal for tourists, corporate travelers, and individuals needing temporary transportation. Short-term rentals are particularly popular in airport locations, urban centers, and tourist destinations, where mobility needs are often spontaneous or brief. Additionally, the rise of digital platforms and mobile apps has made it easier for users to quickly book vehicles for short durations. This segment benefits from high turnover and frequent customer engagement, contributing significantly to overall market revenue.

Based on the booking mode

• Online
• Offline

Based on booking mode, the online segment is anticipated to dominate the car rental market, driven by the increasing penetration of smartphones, internet accessibility, and the growing preference for digital convenience. Customers now favor online platforms for the ease of comparing prices, checking vehicle availability, accessing promotional offers, and completing instant bookings. The surge in mobile app usage by leading rental companies such as Hertz, Avis, and Enterprise has further enhanced user experience by offering features like GPS tracking, contactless pickup, and digital payments. Online booking also enables better customer service and operational efficiency through automation and real-time fleet management.

Based on the application

• Leisure/Tourism
• Business

Based on application, the leisure/tourism segment is projected to hold the largest share in the car rental market. This dominance is primarily driven by the global rise in domestic and international travel, where tourists seek flexible, private, and convenient transportation options. Vacation travelers often prefer rental cars to explore destinations at their own pace, especially in areas with limited public transport. Additionally, the post-pandemic travel rebound, and growth of weekend getaways and road trips have further fuelled demand. Online travel agencies and bundling options with flights and accommodations have made renting cars for leisure easier than ever, boosting this segment’s growth.