New report explores the top trends and challenges in the car rental market

The car rental industry faces a number of challenges as it undergoes huge transformation, a new report from Amadeus and Microsoft suggests.

Amadeus car rental data shows that worldwide car bookings increased by 23% in Q1 2023 compared to the same time last year.

However, emerging business models, disruption of supply chains, the sustainability curve, demand for seamless customer experiences and maintaining agile technology capabilities are among the key challenges facing the industry today.

Amadeus and Microsoft’s latest report, Ahead of the Curve: how technology is driving the future of the rental car industry, outlines the challenges and demonstrates the key trends and opportunities for car rental companies to adapt for the future of travel.

It aims to examine new ways of thinking for the industry to help providers deliver a best-in-class service to the end traveller.

The report highlights five top trends that are emerging and shaping the car rental market:

MaaS connectivity – a single service that enables city-based trip planning, cost comparisons and purchasing. A competitive MaaS market can bring together services such as public transit, ride hailing, and bike sharing into one marketplace to help meet customer expectations for multi-mobility and sustainable options.

Agile competition – as business models shift from product-centric to customer-centric services, traditional car rental providers face strong competition as new providers offer flexible, convenient, and sustainable offerings.

Evolution of autonomous vehicles – with the rise of AI and technological advances in AV (autonomous vehicle) fleets, it is more inevitable that these will become a reality. Alongside decreased demand from consumers to own vehicles, AVs offer a shared use mobility model.

Original Equipment Manufacturers’ developing role – OEMs are moving from only automobile manufacturers into mobility solution providers. Through understanding their end users’ customer preferences, OEMs are finding new ways to reach customers with new offerings in sustainable and innovation technologies.

Big data – increased use of data insights and AI mean car rental providers will be able to optimize their fleets, enable future forecasting and provide personalized customer experiences.

Peter Altmann, vice president, mobility and travel protection, hospitality, Amadeus, said: “The car rental market continues to evolve at a fast pace, and it is both challenging and exciting for the industry, as new players and models enter the space.

“What is clear from our research is that technology plays a central role in helping traditional and new car rental providers create the experience and travel that consumers want.

“Research into the future traveller is fascinating: with 70% of Generation Z not having a driver’s license, there is a huge opportunity for rental providers to target the modern traveller.

Sustainability is also another rapidly evolving priority for the industry, and through transformation such as MaaS, we can start to unlock new avenues, data, partnerships, and technologies to successfully harness this transformation.” 

Julie Shainock, global leader, travel and transport at Microsoft, added: “With the advent of Generative AI, car rental providers are gaining more visibility into their entire data ecosystem.

“This is creating accelerated disruption in everything from improved operational efficiency, increased employee insight to make more informed decisions, to hyper personalized and frictionless experiences for consumers.

“As we look toward the future of car rental, all facets of the business will have a new passenger in the car assisting everyone at each stage of their own journey.”