The US has been the largest car rental market in the world for well over 15 years. Driven by strong international and domestic demand, well-established infrastructure, and a highly competitive landscape, the US car rental market has been a strong performer even in turbulent times. However, it seems that the market has reached saturation point. Several indicators now suggest that the industry is entering a new phase – one characterised less by expansion and more by consolidation and optimisation.
US car rental market enters mature phase as fleet and transactions flatline
The first clear indication of a shift comes in the form of a rare contraction.
For the first time since at least 2010 (discounting the COVID-19 disruption) the US short-term car rental market has experienced a decline, contracting by 1.9% in 2024
Source: Euromonitor International
The slowdown seems to have occurred naturally, without any major external influences. The downturn was not caused by any significant shifts in the travel industry, which showed solid growth in 2024: tourism spending grew by 26.2% while spending per trip grew by 2.3%.
Furthermore, this contraction appears to be part of a broader trend rather than an isolated event. Both car rental fleet and the number of transactions showed meagre growth in 2024, of 0.1% each. This shift towards stagnation indicates that the market has been affected by a slowdown in aspects directly linked to both supply of, and demand for car rental services. A plateauing car rental fleet suggests that the market players do not see opportunities for growth in the near future. Flattening transaction numbers show that they might be right.
This is further illustrated by a decline in daily price per transaction – the amount a client pays per day per one car rental transaction. Its decline since 2023 suggests that consumers have become more price-conscious and are tending to choose better deals or cheaper options – rarely a sign of a growth-orientated market. Additionally, it shows that players have to compete for client attention and retention, despite inflation and rising operating costs.
Finally, limited market growth opportunities are also indicated by high market saturation. In terms of car rental market saturation (measured by the number of rental cars per 1,000 population) the US comes fourth out of the 56 car rental markets that Euromonitor International covers in detailed analysis. This high level of saturation indicates that the market may be close to capacity, providing little room for expansion for both established and entry level players.
Taken together, these indicators strongly suggest that the US short-term car rental market has entered a mature phase.
Car rental companies will need new strategies to unlock growth
As is usual in mature markets, market players that seek to achieve significant growth will have to do it by winning over market share from other existing players rather than expanding the market itself. This is already being demonstrated by SIXT and Europcar – which were the only players to see significant revenue growth in 2024, by aggressively expanding their locations and market share at the cost of more established players, like Avis, Hertz and Enterprise.
Prices are expected to remain stable or even decline in 2025, as players will continue to compete within a limited market for client attention. This is especially true as consumers are being taken away not only by direct competition but also by providers of other mobility solutions, such as ride hailing and car sharing. For comparison, while the short-term car rental market contracted in the US in 2024, shared mobility market size increased by 11.1%.
Due to rising operating costs and fierce competition for customers, car rental market players are expected to turn to optimisation. A shift to increase business effectiveness by utilising quicker rental processes, better client targeting and fleet management will become a necessity to survive in the car rental market in the future.
In a bid to unlock new revenue streams, some short-term car rental providers may turn to alternative business models. Several major players, such as Enterprise and SIXT, have expanded their services beyond traditional rentals to include other mobility solutions, such as long-term lending and car subscription. It is expected that more players will expand their services in a similar way to offer greater flexibility and long-term customer retention in an increasingly competitive environment.
Despite the challenges, the US car rental market is projected to remain the largest globally. The market is predicted to remain stable between 2025 and 2040, but with slower growth than in previous decades, at a predicted CAGR of 2.5%.
Discover global trends and strategic insights in our briefing: The World Market for Car Rental.