India Car Rental Market Size (2024 - 2029)

India Car Rental Market Analysis

The India car rental market was valued at USD 2.9 billion in the current year, and it is expected to reach USD 3.8 billion, projecting a CAGR of 5.5% during the forecast period (2023 - 2028).

• Increasing urbanization rate, growth in the millennial population, improved mobility infrastructure, and rise in tourism serve as the major determinants for the growth of the car rental market in India. With better road transportation infrastructure and a rise in urban population, there will exist a demand for personal mobility, which in turn contributes to the boosting demand for car rental services as it assists in extending an alternative and financially feasible option to the consumers. For instance, the urban population as a percentage of the overall population in India stood at 36% in 2022, compared to 34% in 2018.
• It is estimated that 34% of the overall population in India are millennials, which serves as one of the largest millennial populations across the globe. It is anticipated that the millennial population will contribute 50% of the overall population by the end of 2030. Due to the high cost of owning personal vehicles, millennials prefer availing of car rental services for shorter trips, which positively impacts the car rental market in India. Further, car rental services are preferred due to their cost-cutting and fuel-saving advantages, which are expected to witness a rapid surge in the coming years.
• Coupled with that, improving investment in road connectivity propels the demand for the car rental market in India as it helps enhance consumers' convenience who are willing to avail of the private medium of transportation. In June 2023, the Ministry of Highways and Transport notified that the total length of the national highways in the country increased by about 59% in the last nine years. The total length of National Highways stood at 91,287 km in 2013-14, which increased to 1,45,240 km in 2022-23. Rapid improvement and investment in enhancing national highways assist in better inter-city and inter-state travel, thus fuelling the demand for car rental space in India.
• One of the major challenges faced by the car rental sector in India is its limitation of integrating into Tier 2 and Tier 3 cities and rural areas. The car rental market is highly clustered around urban pockets in India as demand for these services is higher in cities such as Bangalore, Hyderabad, Delhi, and Mumbai, among others. Therefore, companies fail to implement strategies to expand their business outside of major urban areas, thus limiting growth opportunities.
• However, technological advancement and a surge in value-added services, such as vehicle pickup and drop services, will contribute to the surging growth of the car rental market in India in the coming years. Various companies operating in the ecosystem have initiated implementing strategies such as fundraising to cater to the growing demand of the car rental market. For instance, in May 2023, IndusGo, a self-drive rental company, received a funding boost of INR 100 crore from its parent company, Indus Motors, to expand its fleet by 1,000 cars in addition to the existing fleet of 480 cars.

India Car Rental Industry Segmentation

Car rental refers to a service wherein a car fleet operating company lends automotive vehicles to customers for a specific period at a pre-defined cost. The car rental market consists of a wide range of companies involved in extending vehicle rental services to its customers across India.

The India car rental market is segmented by booking type, application type, vehicle type, and rental duration. By booking type, the market is segmented into online and offline. By Application type, the market is segmented into tourism and commuting. By Vehicle Type, the market is segmented into luxury/premium cars and economy/budget cars. By Rental Duration, the market is segmented into short-term and long-term. 

The report offers market size and forecast value (USD) for all the above segments.