European Car Rental Market – Overview and Structural Perspectives
Mobility is a theme currently very much in fashion, driven by changing consumer attitudes, urbanization and other societal changes, e.g. an increased focus on the sharing economy overall. We see mobility as a megatrend, which will shape society over the foreseeable future. As more and more people seek alternative solutions to car ownership, e.g. car and/ or ride sharing, demand is created for providers of mobility services.
Recently much of the news flow has been around Uber, but car sharing at large is attracting significant interest with a growing number of operators entering this space. Despite the strong inflow of new operators, we do believe that more traditional providers of mobility solutions and services, e.g. car rental operators, can thrive and grow in the current environment. After all, car sharing is nothing more than a (very) short term rental, so to us this represents a new segment rather than a fundamentally new and different business model. Further, the populace using car sharing services for their day-to-day needs may also be more susceptible to use traditional car rental operators, e.g. for vacation purposes, based on the simple fact that they generally do not own a car. Thus, the emergence of car sharing solutions may actually increase demand for traditional car rental as well.
The focus of this paper is the European car rental sector, for which we see exciting years ahead from a structural perspective. In the United States, car rental is now effectively an oligopoly with 3 groups controlling approximately 95% of the overall market. In Europe, the situation is different with a more fragmented market where the top 5 control around 65% of the total market, the rest being in the hands of independent players. We see Europe moving towards the US in terms of market structure, consolidating through M&A activity.
Download the full paper here