Mexico Car Rental Market Forecasts from 2023 to 2028

The Mexican car rental market is estimated to grow at a CAGR of 7.06% from US$2.927 billion in 2021 to US$4.720 billion by 2028.

Significant growth in the travel and tourism industry of the country is one of the key factors driving the growth of the market. Many visitors and tourists use a car rental service throughout their vacation to make travel easier. The rising number of foreign tourists in the country is the major driver of the car rental market in the region.

Additionally, the adoption of specialized mobile applications for customer convenience has further assisted market players in capturing a bigger client base as a result of increasing internet usage in Mexico. The popularity of car rental services is largely influenced by technological development.

Market Growth Drivers:

The growing tourism sector in the country

A huge surge in tourism and online services has led to major growth in the car rental market in Mexico. For instance, despite economic concerns, Hertz Global Holdings Inc (HTZ.O), a growing player in the online car rental market, stated that it anticipates sequential sales growth in the second and third quarters of this year, and the company's shares increased by 8%. The number of visitors was 38.3 million in 2022 and was doubled to 40 million by 2023. the National Statistical Institute (INEGI) reports that there were 18% more tourists in Mexico in February 2023 compared to February 2022, which resulted in the demand for car rental services in Mexico.

Efforts of Service providers

Moreover, due to increased efforts by service providers, the use of these services has recently expanded in various places. For instance, Uber Technologies Inc. uses mobile technologies and other devices to meet consumers' needs for personal transportation better and effectively. Rental companies now offer a wider range of options owing to smartphone apps that make short-term automobile rentals easier. Vehicles are picked up and dropped off at a variety of potential pre-determined locations for durations that are timed in blocks of one hour or thirty minutes. Even without any human interaction, the full transaction can be carried out over the phone. Additionally, Hertz has extended the paradigm of car rentals to commercial vehicles such as vans.

The online mode of booking is anticipated to expand.

The rising penetration of smartphone-based online rental car booking apps is significantly contributing to the overall market growth. Increasing usage of the internet has helped companies in the market to capture a large customer base with the help of online booking mobile applications for the convenience of customers. For instance, on May 2023, the car-sharing mobile app KEKO will make its service available in Mexico City. With KEKO, the customer can rent a car for a long period, saving time and money due to a straightforward payment system.

Market Developments:

• A business partnership between JAC, a Chinese automaker, and Grupo Guepardo, which represents Budget Rent-A-Car in Mexico, was signed in February 2022. Grupo Guepardo will supply a fleet of City Cars for Budget, fully electric variations of its JAC E10X, as part of the agreement. It will have the first fleet of fully electric automobiles in Mexico.
• In June 2022, in a takeover bid, the Volkswagen-led consortium obtains 87.38% of Europcar share, a leading online rental car distributor in Mexico. Major car rental services like KAYAK are also expanding due to online booking of rental cars.
• In February 2023, the car rental firm Planet42, located in South Africa and founded in Estonia, announced that it had secured US$100 million to expand its business in Mexico and South Africa. The investment consists of a US$75 million credit facility from Rivonia Road Capital, US$15 million in equity from new and current owners, including Naspers Limited, Andrew Rolfe, and Change Ventures, and Us$10 million in debt from shareholders. The money will be used to expand the business activities in South Africa and quicken its entry into the Mexican market.
• Priceless Car Rental announced in March 2023 that it would be adding three more sites to its franchise network in Mexico, in the popular tourist destinations of Cancun, Merida, and Tulum. The company had a regional presence in some parts of Mexico, but seeing the market offering, the company decided to grow its presence rapidly.

Market Segmentation:

By Car Type

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

By Mode of Booking

• Online
• Offline

By Rental Category

• Local Transport
• Airport Transport
• Outstation Transport