Sunil Gupta, MD & CEO, Avis India

Sunil Gupta has an experience of over 25 years in leading MNCs in India across FMCG and business & financial services like Hindustan Unilever, Thomas Cook and Kuoni. His skills in the areas of sales, brand building, new business development and business re-structuring have helped in the creation and execution of strategies that have delivered high growth and profitability in diverse businesses. For the past couple of years, his passion has been the development and deployment of unique IT solutions for customer management and automation of business processes.


A recent report estimated the Indian car rental market will grow at a Compound Annual Growth Rate (CAGR) of 9.38% making it a $2.03 billion industry by 2026. 

So what factors are driving that growth? Some people are realizing that buying cars ties their money up in a depreciating asset, which gives no returns in years to come. However, renting one is the greatest boon, wherein there are no overhead expenses, and the vehicle is rented out for a specific period at a fixed cost. The rental companies cover all the unpredictable and sudden expenditures linked to owning a car. With the emergence of such services in India, the automobile industry has seen a major change in how its products are now being sold.

Overburdened public transportation system

India is the world’s second most populated country, with 138 crore people, accounting for 17.7% of the world’s total population share. With such statistics, every resource is overburdened, and even public transportation in peak hours gets crowded and cramped. Not only is it a big concern to find ample space to travel in Metros and buses, but even public cabs and auto-rickshaws are reluctant to serve amid peak traffic hours. 

Post-pandemic, the way people commute has changed. Many opt for personal vehicles instead of public transport. This can partly be attributed to the pandemic and the rest to the growing tendency towards comfort. A report states that this awareness and growing consciousness towards personal mobility is expected to increase the demand for rental cars by nearly four to five times in the coming years. While the independence of traveling in comfort and peace is unmatched, on the other hand owning a vehicle is expensive with its added maintenance hassles. In such scenarios, car rental services are a revelation opening avenues that alleviate this problem.  

New generations prefer quick vehicle upgrades

The food hubs are buzzing, and shopping malls are flocking with people again. Everyone wants to have an experience of what’s new. The younger generation is modish and wants to keep themselves up to date with what the world offers. It is reflected in their inclination towards all the contemporary and voguish products available. This behavior is well reflected in their preference to own the latest vehicles as well. 

While buying a new car every few years is neither feasible nor practical for everyone, car rental companies are the savior, giving them an option to rent vehicles for shorter periods. Consumers can use a car for some time and then freely upgrade to the latest vehicle of their liking. Notionally, a buyer loves their car, and everyone desires to make a quick upgrade, which is what rental companies precisely offer without burdening the users with the additional costs. 

No maintenance, easy access, and cost-effective

Leasing and renting vehicles are about 50%-60% cheaper than using cabs. As per this analysis by a SEBI-registered investment advisor, renting a self-driven car is about 11 times more economical than owning one. 

With such statistics in favor of car rental, it is understandable to see it positioned as a cost-effective go-to choice for the modern consumer.  

Owning a vehicle today can present a paradox to consumer desire for more time, money, and freedom.

While vehicle ownership can lead to the additional hassle of regular maintenance, haggling over annual insurance and the potential added burden of loans and interest; car rental offers freedom from maintenance requirements and other common inconveniences – all with a with a superior customer service too. 

Conclusion: The future of the car rental business

The final verdict is clear and loud. The car rental business is set to boom, with consumers needing more personal mobility without overhead expenses and responsibilities tied to taking ownership of the vehicle. The charm of having ownership is sometimes unmatched, yet millennials are more pragmatic about their needs. As living and working in cities has its unique set of challenges, the scales are certainly tipping in favor of rental companies. 

Content Disclaimer

Related Articles