April 14, 2024

The Lucrative Mexico Car Rental Market to grow at highest pace owing to rising tourism and business travel

Car rental services help people access vehicles for transportation when they are traveling without owning a car or when their personal vehicle is unavailable. Customers can easily book rental vehicles online or at airport/city locations for a few hours, days or weeks depending on their travel needs. The Mexico car rental market offers a wide range of vehicle options from economy to luxury cars along with additional services like GPS navigation, baby seats etc. based on customer preferences and budgets.

The Mexico Car Rental Market is estimated to be valued at US$ 1405.47 Mn in 2024 and is expected to exhibit a CAGR of 7.9% over the forecast period 2024 to 2030.

Key Takeaways
Key players operating in the Mexico Car Rental Market Size are Eversman Corporation, ABI Equipment, TEXOMA Augers, Agritech, Morris Industries, G P Industries, Tricon Manufacturing, Agri Drill, Avant Tecno, Caterpillar, Paladin Power, Auger Torque, Little Beaver, Danuser, Blue Diamond Attachments, Erskine Attachments, Macfarlane Augers, Terex, Bobcat, Dando Drilling International. Rising tourism and business travel have boosted the demand for car rental services in Mexico in recent years. Advancements in online booking platforms and mobile apps have made car rental services more convenient and accessible for customers.

Market Trends
Increased adoption of electric vehicles – Growing environmental awareness and government initiatives are encouraging car rental companies to introduce more electric vehicles in their fleets. This will help reduce carbon emissions.

Emergence of mobility as a service (MaaS) – Customers now expect seamless transportation solutions combining different modes of travel like public transport, car sharing, taxis etc. through single platforms. Major players are investing in MaaS to offer customized mobility packages.

Market Opportunities
untapped regional cities – Most car rental services currently focus on major airports and tourist destinations. There is opportunity to expand presence in tier 2/3 cities as travel increases.

Partnerships for corporate travelers – Collaborating with corporate travel agencies/management firms can boost car rental bookings for business travelers through negotiated rates.

Impact of COVID-19 on Mexico Car Rental Market Pre-COVID and Post-COVID Scenario

The COVID-19 pandemic has significantly impacted the Mexico car rental market. During the initial months of the pandemic in 2020, the market witnessed a steep decline in demand as strict lockdowns and travel restrictions were imposed across the country. People refrained from non-essential travel which adversely affected the rental car business. With offices and businesses shut down, there was very little need for rental cars for commercial purposes as well. According stricter hygiene and safety protocols implemented by rental car companies further dampened demand.

However, as lockdowns started easing from mid-2020, the market has witnessed a steady recovery. Domestic travel within Mexico picked up as restrictions were lifted on inter-state movement. People preferred personal vehicles over public transport or shared mobility options due to safety concerns which benefited the rental car market. Furthermore, rental car companies implemented thorough sanitization procedures of cars after each use to rebuild customer trust. Contactless services including key and document pickup facilities increased convenience.

Going forward, the market is expected to grow steadily driven by a rebound in business and leisure travel both domestically and from other countries. While international tourism is yet to recover fully, promotions and offers by rental car companies will aid demand recovery. They need to focus on optimizing fleets, streamlining operations and digital services to improve customer experience in the new normal. Adopting sustainable practices can help gain an edge in the post-pandemic market.

Geographical concentration of Mexico Car Rental Market

In terms of value, the Mexico car rental market is highly concentrated in Mexico City and surrounding areas in the central region of the country. Mexico City has the highest population as well as business activity with numerous national and international companies located in and around the capital city. It accounts for over 35% of the country’s total rental car demand. Other major cities driving rental car business include Guadalajara and Monterrey which are economic powerhouses in western and northern Mexico respectively. The Yucatan peninsula particularly Cancun and Playa del Carmen attracts a large number of tourists and hence contributes substantially to rental car demand.

Fastest growing region in Mexico Car Rental Market

The Yucatan peninsula region in southeastern Mexico comprising the states of Yucatan, Quintana Roo and Campeche is witnessing the fastest growth in the car rental market. Quintana Roo, home to tourist hotspots like Cancun and Tulum has seen the strongest annual rental car demand growth of over 12% during the past 5 years. The booming tourism industry in the region centered around beach destinations is the major factor. International visitor arrivals to Cancun and other parts of the Yucatan have grown steadily promoting local transportation needs. Furthermore, real estate and other infrastructure development projects are supporting commercial rental car requirements. With expansion of tourism facilities and infrastructure, the growth momentum of the car rental business is expected to continue in the Yucatan peninsula region over the coming years.

Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it