Pricing: What is the economics of the rental car industry?

economics of the rental car industry

The global pandemic devastated economies worldwide during the years 2020 to 2021 and the impact was felt by many businesses and industries, especially transportation services. The later part of the year 2021 has been the slow recovery period for all businesses of various sectors and the economics of the rental car industry is also expecting a positive future. The rental car industry which is worth over 50 billion dollars was also succumbed to this big blow in 2020.


The Downfall

When countries shut down during Covid-19 and when travel came to a standstill, the car rental industry saw a huge drop in demand for car rentals. In order to manage their fleet and business, car rental companies had to strategically remove cars from their fleet. The wait for a return to normalcy did not just take months, it has taken years and 2022 looks like positive dawn to many industries including the rental car industry.

A million jabs later, with safety and hygiene protocols, people have gradually started returning back to work, kids and young adults have started returning to schools and universities. Due to this, the demand for rental cars has shot up again. BUT, the scarcity of rental cars to match the demand has made rental car companies increase their prices.


The Price Hike

The cost has doubled and travellers who hope to rent a car are expected to book very early and look for options at locations beyond airports and prime, expensive spots and be prepared to pay more than usual. Providing flexible travel dates will help increase the options.

In the recent past, rental car companies have been trying to acquire more vehicles to expand their fleet. But, it has been very tough for companies to get enough vehicles say sources. The impact is being felt everywhere, especially at hot tourism spots in Canada.


The Recovery

Although it has been a bumpy economic recovery, growth of the tourism industry and increases in international air travellers, the Canadian Car Rental industry’s future looks promising.

If slowly and gradually, the rental car industry acquires enough cars to match up to the demand, the prices may match the pre-pandemic rates. The market size of the car rental industry in Canada is expected to increase by 9.5% in 2022 (Source: In fact, the rental car industry in Canada has increased in market size compared to the Real Estate and Rental and Leasing sector in Canada.


Other Factors

Even though consumer confidence and inbound international travel are on the rise, fuel prices are a threat now for the stability of the industry’s future expansion. Consumers are more cautious of their usage linked to high gas prices.

Also, to compete with the rental car company’s heavy prices, there are chances and possibilities for new companies to enter the market to compete with a substitute travel program like leasing or carpooling


Overall, the rental car industry will slowly and gradually come to a healthy place since with all this economic crunch, it still grew 2.5% per year on average between 2017 and 2022. (source: IBIS world)




If you want more info regarding the car rental software, please reach out to our team by filling out the form and we will get in touch with you at the earliest convenience. And please let us know of your thoughts by tweeting us!


At RENTALL we’re on a mission to be the SaaS solution of choice for rental operators looking for growth and stability in a disruptive sector.

Request Demo

    Type of Vehicles

    Number of Vehicles

    Number of Locations

    "Our minimum fleet size required to implement RENTALL is 10 vehicles. However, we do make exceptions in certain cases, such as expected growth in the next 12 months, or other factors in your operation. To discuss your business and see how RENTALL can work for you, please contact and a member of our sales team will reach out to you."