Car Rental Market Accelerates Worldwide as APAC, Europe, USA, and Saudi Arabia Drive Digital, EV, and Shared Mobility Transformation

The United Kingdom’s car rental market is on an upward trajectory, projected to expand from USD 3.80 billion in 2025 to USD 6.43 billion by 2035, registering a CAGR of 5.4% during the forecast period. The sector’s growth is underpinned by a resurgence in both domestic and international travel, continued urbanisation, and a sustained consumer shift toward flexible and shared mobility solutions, in line with changing lifestyle and environmental priorities.

According to the latest industry estimates, the UK’s inbound tourism is expected to fully recover by 2025, supported by post-Brexit regulatory clarity and government-led tourism initiatives. VisitBritain forecasts a robust rebound in international travel spending, while growing investment in regional tourism infrastructure is driving rental demand in key destinations such as London, Edinburgh, and Manchester.

Digitalisation, EV Integration, and Changing Mobility Preferences

Leading market players — including Enterprise Rent-A-Car, Hertz, Europcar, Avis Budget Group, and Sixt — are redefining the UK car rental landscape through digital transformation and fleet electrification. Mobile apps, keyless pickup systems, and automated return solutions are now standard across major operators, enhancing customer convenience and operational efficiency.

Electric and hybrid vehicles are becoming central to rental fleets. Nearly 10% of UK rental fleets are now plug-in models, double the share from 2022, as companies align with the nation’s Net Zero Strategy. This transition not only supports environmental goals but also meets growing consumer demand for low-emission mobility.

Millennials and Gen Z consumers are driving new rental models. A Deloitte UK Mobility report reveals that nearly 50% of younger British consumers now prefer shared or subscription-based vehicle access over ownership. Platforms such as Turo, Zipcar, and Virtuo have capitalized on this shift, expanding rapidly in urban centers where convenience and affordability dominate decision-making.

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Market Performance and Semi-Annual Outlook

The UK car rental sector demonstrated cyclical yet resilient growth momentum, with CAGRs fluctuating between 4.7% and 6.1% across semi-annual periods from 2025 to 2035.

• H1 2025: CAGR at 6.1%, reflecting heightened summer travel demand and business mobility.
• H2 2025: Slight moderation to 4.7%, influenced by seasonal normalization and cost adjustments.

These trends underscore the market’s adaptability to consumer spending cycles and evolving travel patterns.

Segment Insights: Economy Cars and On-Airport Rentals Lead Growth

Economy cars remain the preferred rental choice, accounting for the largest segment share, growing at a 4.7% CAGR (2025–2035). Their affordability, fuel efficiency, and compact design make them ideal for city travel and eco-conscious users. The segment benefits from the rise of car-sharing services and consumer awareness of sustainability.

On-airport rentals continue to dominate the market, expanding at a 5.2% CAGR through 2035. With strong tourist arrivals and business travel recovery, major hubs such as Heathrow, Gatwick, and Manchester airports are witnessing record rental volumes. Operators are prioritizing green fleet integration and contactless digital services to enhance passenger experience and align with climate commitments.

Key Growth Drivers

• Tourism resurgence: Rebounding leisure and business travel strengthens short-term rental demand.
• Corporate mobility: Flexible, cost-efficient rental packages gain traction among businesses seeking asset-light operations.
• Urbanisation: Rising congestion and parking costs in cities drive adoption of rental and car-sharing alternatives.
• EV adoption: Accelerating electrification in fleets aligns with sustainability mandates and consumer eco-preferences.
• Digital convenience: Mobile booking, app-based payments, and contactless car access redefine user experiences.

Competitive Landscape

The market remains moderately consolidated, with Tier 1 leaders — Enterprise, Hertz, and Avis Budget Group — commanding over 55% of market share through extensive national networks, advanced fleet management, and AI-driven operational systems.

Tier 2 competitors, including Europcar and Sixt, maintain regional strength via flexible pricing and digital innovation, while Tier 3 players such as Green Motion and Firefly cater to niche, eco-friendly, and budget-conscious segments.

Industry Developments

• November 2024: Singapore’s ComfortDelGro acquired London-based Addison Lee for £269.1 million, expanding its UK footprint with over 7,500 drivers and 5,000 vehicles.
• 2024 EV Surge: Battery-electric vehicles now represent 4% of the total UK rental fleet, marking a 200% growth since 2022.

Outlook

With strong demand fundamentals, sustainability commitments, and accelerating digital adoption, the UK car rental market is positioned for steady, technology-driven expansion through 2035. The rise of hybrid fleets, data-driven pricing models, and subscription mobility will define the next phase of competitive differentiation and customer engagement.

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