Europe Car Rental Market

Europe Car Rental Market Size (2025 to 2033)

The car rental market in Europe is growing at a brisk pace and is expected to showcase a CAGR of 13.1% from 2025 to 2033. The size of the European car rental market was valued at USD 15.2 billion in 2024 and is anticipated to reach USD 17.19 billion in 2025 from USD 46.03 billion by 2033.

Car rental is a pivotal segment of the travel and mobility industry of Europe and cater to diverse customer needs, including leisure, business, and emergency transportation. The demand for car rentals in Europe is consistently growing due to robust tourism, business travel, and urbanization trends. According to the European Travel Commission, Europe hosted over 600 million international arrivals in 2022. The demand for car rental is growing significantly, particularly in tourist-centric nations like Spain, Italy, and France. Additionally, the shift toward sustainable mobility solutions has led to the increasing adoption of electric and hybrid vehicles in rental fleets, aligning with the European Union’s Green Deal objectives for carbon neutrality by 2050.

MARKET DRIVERS

Growth in Tourism and Business Travel in Europe

The expansion of the tourism and business travel sectors is a primary driver of the European car rental market. According to the European Travel Commission, Europe recorded over 600 million international tourist arrivals in 2022, making it the world’s most visited region. Countries like France, Italy, and Spain benefit significantly from this influx, with car rentals serving as a convenient mode of transportation for tourists exploring regional attractions. Additionally, the European Commission highlights that business travel within the EU contributes to a steady demand for car rentals, particularly in urban centers and airport locations. This robust travel activity underpins the continuous growth of the car rental market across Europe.

Adoption of Sustainable Mobility Solutions

The increasing emphasis on sustainable mobility is driving the adoption of eco-friendly vehicles in Europe’s car rental fleets. The European Union’s Green Deal mandates significant reductions in carbon emissions, prompting rental companies to integrate electric and hybrid vehicles into their offerings. According to the European Environment Agency, electric vehicle registrations in Europe increased by over 137% between 2019 and 2021, reflecting growing consumer interest in low-emission transportation. Rental providers in countries like Germany and the Netherlands are capitalizing on this trend, offering eco-friendly options that align with regional sustainability goals and customer preferences for greener travel choices.

MARKET RESTRAINTS

High Operational and Maintenance Costs

The European car rental market faces significant challenges due to high operational and maintenance costs. Managing and maintaining diverse fleets, including electric and hybrid vehicles, requires substantial investment in infrastructure, spare parts, and skilled personnel. According to the European Commission, the annual maintenance cost for electric vehicles can be 20% higher than traditional cars, particularly in regions where charging infrastructure is limited. Additionally, fluctuating fuel prices and insurance premiums further increase the financial burden on car rental companies. These expenses impact profitability, especially for small and medium-sized operators, limiting their ability to compete and expand.

Regulatory Compliance and Environmental Standards

Stringent regulatory requirements and environmental standards present a restraint for the car rental market in Europe. The European Union’s Clean Mobility Package mandates significant reductions in vehicle emissions, pushing rental companies to transition their fleets to low-emission vehicles. While this shift aligns with sustainability goals, it imposes high upfront costs for acquiring electric and hybrid vehicles. The European Environment Agency notes that only 17% of rental fleets in Europe currently consist of low-emission vehicles, highlighting the financial and logistical challenges of compliance. Additionally, regulatory disparities across EU member states complicate operations for multinational rental companies, adding to administrative and operational hurdles.

MARKET OPPORTUNITIES

Expansion of Electric Vehicle (EV) Rental Fleets

The growing demand for electric vehicles (EVs) presents a significant opportunity for the European car rental market. With the European Union’s target of reducing carbon emissions by 55% by 2030, rental companies are increasingly integrating EVs into their fleets to align with sustainability goals. According to the European Automobile Manufacturers Association, EV sales in the EU grew by 137% between 2019 and 2021, reflecting a rising preference for eco-friendly mobility options. Countries like Norway, where EVs represent over 80% of new car sales, showcase the potential for rental companies to cater to environmentally conscious consumers. Investing in EV fleets allows operators to differentiate their services and attract customers prioritizing sustainable travel.

Technological Advancements in Mobility Solutions

Technological innovations, such as app-based booking systems, telematics, and contactless payment options, offer opportunities for growth in the European car rental market. The European Commission emphasizes that digitalization enhances customer convenience and operational efficiency, leading to increased market adoption. Features like AI-driven demand forecasting and fleet optimization are enabling rental companies to manage resources more effectively. Additionally, the integration of telematics systems helps monitor vehicle performance, reducing maintenance costs and improving safety. Markets in Germany and the Netherlands are at the forefront of adopting these technologies, highlighting the potential for digital transformation to drive long-term growth in the car rental industry.

MARKET CHALLENGES

Inadequate Electric Vehicle Charging Infrastructure

The insufficient availability of electric vehicle (EV) charging infrastructure presents a significant challenge to the European car rental market. Although rental companies are increasingly adopting EVs to meet sustainability goals, the European Commission reports that there are only 225,000 public charging points across the EU as of 2022, far below the estimated 1 million needed by 2030. This disparity limits the practicality of offering EVs in rental fleets, particularly for long-distance travel or in rural areas. The lack of a cohesive charging network discourages customers from opting for EV rentals, creating barriers to expanding sustainable mobility solutions in the car rental sector.

Seasonal Demand Fluctuations

The European car rental market experiences seasonal demand fluctuations, creating operational and financial challenges. According to the European Travel Commission, demand peaks during the summer months due to tourism activity, while the off-season sees significant drops in bookings. This uneven demand impacts fleet utilization rates, forcing companies to maintain excess inventory during low-demand periods, leading to increased storage and maintenance costs. Countries like Spain and Italy, which heavily rely on seasonal tourism, face greater vulnerabilities to these fluctuations. Managing workforce levels and optimizing fleet sizes to align with varying demand remains a persistent challenge for car rental operators across Europe.

REPORT COVERAGE

SEGMENT ANALYSIS

Europe Car Rental Market Analysis By Vehicle

Based on vehicle type, the economy cars segment is expected to dominate during the forecast period. The majority of passengers prefer economy cars as they are convenient, fuel-efficient, and affordable. The economy cars are compact and comfortable enough for tourism purposes. Hence, these factors are accelerating the growth of the economy cars segment during the forecast period.

Europe Car Rental Market Analysis By Application

Based on application type, the airport transport segment is expected to hold a significant share during the forecast period. The increasing number of airports and the large number of people traveling to airports for tourism purposes are generating a need for car rentals in the region, leading to the airport transport segment's growth. 

Europe Car Rental Market Analysis By Rental Duration

Based on the rental duration type, the short-term segment is expected to hold a significant share during the forecast period. The increasing number of car rental services in airports and local transportation is driving the growth of the short-term segment during the forecast period.

REGIONAL ANALYSIS

Germany held the leading share of the European car rental market in 2023 and the lead of Germany is expected to continue throughout the forecast period due to the strong business travel sector of Germany, robust automotive industry, and advanced infrastructure. The Federal Statistical Office of Germany highlights that business travelers account for a significant portion of the rental demand, particularly in urban hubs like Frankfurt and Munich. Additionally, Germany’s emphasis on integrating electric vehicles into rental fleets aligns with its sustainability goals and growing consumer interest in eco-friendly mobility.

France is anticipated to register promising growth over the forecast period in the European market. The thriving tourism sector of France and efficient transport networks are propelling the car rental market in France. According to the French Ministry of Tourism, France attracts over 90 million international visitors annually, fueling demand for car rentals, especially in regions like Paris, Provence, and the French Riviera. The country’s well-developed rail and airport connectivity supports seamless car rental experiences for travelers.

The United Kingdom is another key regional segment for car rental in Europe and is estimated to account for a notable share of the European market over the forecast period. The extensive airport network and growing e-commerce-driven logistics demand are boosting the car rental market in the UK. The UK Department for Transport reports high rental activity in cities like London and Manchester, catering to both tourists and business travelers. The increasing availability of electric vehicles in rental fleets highlights the UK’s commitment to sustainability, further enhancing its market position.

KEY MARKET PLAYERS

Avis Budget Group Inc., Enterprise Holdings Inc., Europcar International, The Hertz Corporation, Europcar Mobility Group, InterRent Car Rental, Peugeot Open-Europe, Localiza Rent a Car SA, SIXT SE, TOYOTA Rent a Car and Thrifty Car Rental Inc. are some of the noteworthy players in the Europe car rental market.

RECENT HAPPENINGS IN THIS MARKET

• In January 2022, SIXT partnered with a local taxi firm it Taxi, to provide on-demand taxi services in Rome through the SIXT app. The organization is advancing the internationalization of its mobility platform ONE by growing its network in Italy and refining its ride-hailing and transfer service offering SIXT Ride.
• In October 2021, Hertz signed a partnership with Carvana for a new direct-to-consumer sales channel for Hertz automobiles. Following its acquisition of KAR Global's physical auction division ADESA for $2.2 billion, Carvana, the digital remarketing portal for every individual, is being used by Hertz to operate thousands of vehicles.
• In December 2019, Avis Budget Group signed a partnership with Verizon and Edison and announced the debut of a new all-in-one digital travel assistant that would be available only to customers of Avis, Budget, and Payless Car Rental.

MARKET SEGMENTATIONS

This research report on the European car rental market has been segmented and sub-segmented into the following categories.

By Vehicle

• MUVs 
• SUVs
• Economy Cars
• Executive Cars
• Luxury Cars

By Application

• Local Usage
• Outstation
• Airport Transport 
• Others

By Rental Duration

• Short-Term 
• Long-Term 

By Country

• UK
• Russia
• Germany
• Italy
• France
• Spain
• Sweden 
• Denmark
• Poland
• Switzerland
• Netherlands
• Rest of Europe