Car and Van Hire - UK - February 2014
“We believe the car and van hire market offers considerable opportunities over the next few years. The sector is set to continue to recover from its recent difficulties with the number of hire days and the value of vehicle hire both forecast to rise. However, as with many markets coming out of the recent economic slowdown, those hiring are set to continue to be preoccupied about costs.”
– Neil Mason, Head of Retail Research
Some questions answered in this report include:
- Will the hire market benefit from the UK’s expected economic recovery?
- What threat do car clubs and peer-to-peer hire pose?
- Does the hire market need to reassess itself?
- Do you have to advertise to be successful?
The market has been relatively subdued in recent years as car and van hire has been negatively impacted by the recent economic slowdown. Responses from the sector to this malaise have mainly been through competitive activity with this serving to depress revenue growth. Nevertheless the car hire market is currently showing an upturn, benefiting from improvements in consumer confidence as well as the performance of the wider UK economy.
Current market valuations put the short-term car and van hire sector at £2.09 billion in 2012. Annual rental numbers are estimated at over 11 million with the average price per rental at just under £200. Although cars form the largest segment of the market, it is the LCV (Light Commercial Vehicles) sector that represents the more buoyant area of activity. Equally it is the business hire market that is presently performing stronger than personal hire.
The hire market is contested by a large number of companies although it is multinational names such as Enterprise, Budget, Europcar and Hertz that have the strongest presence. Competition is coming in the form of alternatives to vehicle hire with car clubs currently the most established and providing the most obvious threat. Their recent growth has led to a number of hire companies diversifying into this market to offer this type of service.
Mintel’s exclusive research for this report suggests that vehicle hire is a relatively specialist market – around three quarters of UK adults interviewed for the report had not needed to hire a vehicle in the last two years. Of those that have hired, young adults aged 18-34 and those in urban areas are the most important market with moving home or hiring for a holiday in the UK the most popular reasons given. Cost is a critical factor for those looking at vehicle hire with direct and indirect costs both important. Indeed with a sizeable percentage of heavy car hire users also showing a strong interest in rival services such as car sharing, the market seems set to face further challenges.
This report analyses the market for self-drive private and business car and van hire.
The market comprises cars as well as LCVs such as light goods vehicles and minibuses that can be driven without requiring a heavy goods or public service licence.
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