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Car Rentals - US - June 2015

"Car rental revenues have been increasing steadily and are expected to continue growing through 2020 as consolidation in the market drives up prices and as travel participation/expenditures rise. New technologies and service model adjustments should help companies maintain sales growth, as should improved loyalty offerings and more streamlined rental processes. There’s a noteworthy desire among many consumers to rent from companies that use innovative technologies, promote convenience, offer transparent pricing models, and meet their unique, individual needs. Green vehicles and luxury offerings are also increasingly capturing the interest of renters, who want to simultaneously boost their perception of themselves while feeling like they are saving some money."
- Lindsey Rogers, Consumer Research Analyst

This report discusses the following key topics:

  • Relatively few are members of a car rental loyalty program
  • Renters are not confident in their choices
  • Pain points lead to dissatisfied customers

For the purposes of this report, car rentals are defined as rentals and car sharing of light-duty passenger vehicles, including, but not limited to, midsize/large vehicles, SUVs, light-duty pickups, and hybrid/alternative power vehicles. The report does not cover vehicle leases. The market size is limited to US car rental operations.

The car rental industry is far from commoditized; most companies cannot compete successfully on price alone and must pay some thought to their customer service and process. Customers want to work with companies that are convenient, use new technologies, offer price transparency, and encourage fun – a few of the reasons why car-sharing services have become so popular. Likewise, they want to work with companies that remove pain points rather than just provide alleviation. This requires that companies be forward looking and anticipate customer needs. It also requires that companies work to build meaningful relationships with their customers – even those that only rent once a year – that go beyond offering discounts and promotions.

 

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

          • Figure 1: Total US car rental revenues and fan chart forecast ($ billions), at current prices, 2010-20
        • The issues
          • Relatively few are members of a car rental loyalty program
            • Figure 2: Membership in a car rental loyalty program, March 2015
          • Renters are not confident in their choices
            • Figure 3: Attitudes toward earning rewards, finding deals, and obtaining value, March 2015
          • Pain points lead to dissatisfied customers
            • Figure 4: Top five car rental pain points, by car rental loyalty program membership, March 2015
          • The opportunities
            • Increase revenue with car-sharing services
              • Figure 5: Number of car-sharing members in the US, 2009-14
            • Appeal to renters using their desired loyalty rewards
              • Figure 6: Top five most desired loyalty rewards, by car loyalty program membership, March 2015
            • Engage loyalty program members with email communications
              • Figure 7: Best tactics for prompting engagement with travel loyalty programs, March 2015
            • Tap into the fun of travel
              • Figure 8: Attitudes toward the excitement of renting a car, March 2015
            • What it means
            • The Market – What You Need to Know

              • Steady growth in the car rental market expected to continue
                • Increases in travel, zero-car households should help drive market
                • Market Size and Forecast

                  • Steady revenue growth expected within car rental industry
                    • Figure 9: Total US car rental revenues and fan chart forecast ($ billions), at current prices, 2010-20
                    • Figure 10: Total US car rental revenues and forecast ($ billions), at current prices, 2010-20
                • Market Perspective

                  • Growth in transportation sector exceeds all others
                    • Figure 11: Total US transportation market value ($ billions), 2009-14
                    • Figure 12: Value sales for transportation, at current and inflation-adjusted prices, 2009-19
                • Market Factors

                  • US travel expenditures continue to rise
                    • Figure 13: US travel expenditures and forecast (in $ billions), 2008-17
                  • Travelers fly in record numbers in 2014
                    • Figure 14: Passengers on all scheduled US-based (millions), domestic and international, 2003-14
                  • Travel sentiment continues trending up
                    • Figure 15: Traveler sentiment index, March 2007-February 2015
                  • Gas prices remain relatively low
                    • Figure 16: US all-grades, all-formulations retail gasoline prices (dollars per gallon), May 2005-April 2015
                  • Zero-vehicle households become more common
                    • Figure 17: US households without a vehicle, 2005-12
                • Key Players – What You Need to Know

                  • Three companies dominate the market
                    • Car sharing is on the rise
                      • Tech and mobile innovations are increasingly important
                        • One-way car rentals have hit US soil
                        • Market Leaders

                          • Three companies dominate the market
                            • Figure 18: Car rental company revenues (estimated) and market share, FY 2012 and FY 2014
                        • What’s Working?

                            • Car-sharing/short-term rentals pulling in $400 million
                              • Figure 19: Zipcar, landing page, September 2014
                            • Rental companies witness increase in demand for luxury cars
                              • Figure 20: National, email advertisement, April 2015
                            • Rental companies grow their environmentally friendly fleets
                              • Distinct brands work to attract specific consumer subsets
                                • Mobile booking apps used by one in four car renters
                                • What’s Struggling?

                                  • Loyalty programs struggle to engage members
                                    • Figure 21: Average number of loyalty memberships per household and active program participation rate, 2010-14
                                  • Stagnant growth in ancillary revenues
                                  • What’s Next?

                                    • Companion apps/travel guides increase brand engagement
                                      • Access apps allow renters to unlock vehicles with their phones
                                        • P2P car-sharing companies gain traction
                                          • Figure 22: RelayRides, “How It Works: RelayRides Peer to Peer Car Rentals,” Aug. 25, 2012
                                          • Figure 23: Getaround, “Getaround – How It Works,” Sept. 9, 2014
                                        • One-way and ‘drop-off-anywhere’ rentals make renting more convenient
                                          • Figure 24: Zipcar, “Zipcar One Way | City Transportation Made Even Easier,” May 1, 2014
                                      • The Consumer – What You Need to Know

                                        • The percentage of adults renting cars increased slightly in 2014
                                          • Few are members of car rental loyalty programs
                                            • Renters want to engage with brands online
                                              • Many renters are frustrated by inconveniences in the process
                                              • Car Rental Usage

                                                • Vehicle renting is back on upswing
                                                  • Figure 25: Share of adults and total adults who rent vehicles, 2004-14
                                                • Most car renters rent for personal/leisure purposes
                                                  • Figure 26: Past 12 month vehicle rental use, by purpose (business versus personal), 2004-14
                                                • Though fewer rent for business, business travelers rent more often
                                                  • Figure 27: Number of times rented a vehicle in the past 12 months, percentage all and business versus personal (mean), November 2013-December 2014
                                              • Car Rental Company Used

                                                • Enterprise is most popular; travelers tend to use Hertz, Avis for business
                                                  • Figure 28: Brands used by car renters in the past 12 months, business use versus personal use, November 2013-December 2014
                                              • Car Rental Loyalty Programs

                                                • Only two in 10 are members of car rental loyalty programs
                                                  • Figure 29: Membership in a car rental loyalty program, March 2015
                                                • Most renters think rewards are too difficult to earn
                                                  • Figure 30: Attitudes toward car rental loyalty programs, March 2015
                                                  • Figure 31: Hertz, email advertisement, January 2015
                                              • Best Tactics for Prompting Engagement with Travel Loyalty Programs

                                                • Car renters prefer engagement via email, online portals
                                                  • Figure 32: Avis, “Avis What Drives You – Blake Mycoskie,” online video, Feb. 24, 2015
                                                  • Figure 33: Best tactics for prompting engagement with travel loyalty programs, March 2015
                                                • Ideas for improving the online user experience:
                                                  • Millennials more likely to want information via mobile devices
                                                    • Figure 34: Best tactics for prompting engagement with travel loyalty programs, index to average by age, March 2015
                                                • Appeal of Specific Loyalty Rewards

                                                  • Nearly half of car renters want to earn free rentals
                                                    • Figure 35: Interest in specific types of loyalty rewards, by car loyalty program membership, March 2015
                                                  • Older renters want freebies, younger renters want convenience
                                                    • Figure 36: Interest in specific types of loyalty rewards, by age, March 2015
                                                • Methods Used to Reserve a Rental Car

                                                  • Half of recent car renters booked directly on a company site
                                                    • Figure 37: Methods used for reserving a rental vehicle in the past two years, March 2015
                                                  • Loyalty program members less likely to need guidance when booking
                                                    • Figure 38: Methods used for reserving a rental vehicle in the past two years, by car loyalty program membership, March 2015
                                                • Types of Vehicles Rented

                                                  • Midsize/large vehicles are most commonly rented, preferred type
                                                    • Figure 39: Types of vehicles rented in past two years and preferred type of rental vehicle, March 2015
                                                  • Younger consumers tend to prefer smaller, less expensive vehicles
                                                    • Figure 40: Top five preferred rental vehicle types, by age, March 2015
                                                • Car Rental Pain Points

                                                  • No pain, no gain? Renters want companies to streamline the rental process
                                                      • Figure 41: Car rental pain points, March 2015
                                                    • Loyalty members tend to expect more from companies
                                                      • Figure 42: Car rental pain points, by car loyalty program membership, March 2015
                                                  • Attitudes toward Renting a Car

                                                    • Green Machines: Many renters seek out environmentally friendly cars
                                                      • Figure 43: Attitudes toward fuel efficiency and going green, March 2015
                                                    • Alternative lifestyles: Renters use multiple forms of transportation to get around
                                                      • Figure 44: Attitudes toward fuel efficiency and going green, March 2015
                                                    • Paradox of Choice: Renters may need a helping hand when selecting car rental services
                                                      • Figure 45: Attitudes toward findings deals, March 2015
                                                  • Consumer Segmentation

                                                        • Figure 46: Car rental consumer segments, March 2015
                                                      • Segment 1: As Needed (43%)
                                                        • Figure 47: Demographics for the As Needed car rental segment, March 2015
                                                      • Car rental profile
                                                        • Segment 2: Hunter Gatherers (35%)
                                                          • Figure 48: Demographics for the Hunter Gatherers segment, March 2015
                                                        • Car rental profile
                                                          • Segment 3: Free Upgrades (22%)
                                                            • Figure 49: Demographics for the Free Upgrades segment, March 2015
                                                          • Car rental profile
                                                          • Appendix – Data Sources and Abbreviations

                                                            • Data sources
                                                              • Sales data
                                                                • Fan chart forecast
                                                                  • Consumer survey data
                                                                    • Direct marketing creative
                                                                      • Abbreviations and terms
                                                                        • Abbreviations
                                                                        • Appendix – Market

                                                                            • Figure 50: Total US car rental revenues and forecast, at inflation-adjusted prices, 2010-20
                                                                            • Figure 51: Number of rental cars in service, 2010-15
                                                                        • Appendix – Consumer

                                                                            • Figure 52: Past 12 month vehicle rental, Fall 2004-14
                                                                            • Figure 53: Past 12 month vehicle rental use, by purpose (business versus personal), Fall 2004-14
                                                                            • Figure 54: Number of times rented a vehicle in the past 12 months, percentage all and business versus personal (mean), November 2013-December 2014
                                                                            • Figure 55: Car rental brands used in the past 12 months, business versus personal use, November 2013-December 2014

                                                                        Companies Covered

                                                                        To learn more about the companies covered in this report please contact us.

                                                                        Car Rentals - US - June 2015

                                                                        £3,277.28 (Excl.Tax)