Depreciation of South African Currency, Growing Working Age population and rising penetration of internet and Smartphone will be the major growth drivers of South Africa car rental market in upcoming years.
South Africa’s car rental market is mature, with the existence of large number of global brands having established a presence in the country. The car rental industry in the country is driven by its good road infrastructure which has resulted in easy travel to many key tourist destinations. Major demand for car rental was witnessed in the summer season owing to huge tourist influx in the country. Although leisure car rental is important to the category, car rental market was driven by business car rental due to the consistent bookings from corporates. The industry witnessed increasing number of business travelers attending events such as meetings, exhibitions, workshops and conferences which boosted the transaction value within the category during 2017. In recent years, the country witnessed increasing prominence of ride sharing, car sharing and online booking market which has aided the overall growth of car rental industry in South Africa.
The car rental industry in the country has been growing at a positive growth rate but the industry has been facing operational issues owing to depreciation of the South African currency. The depreciation has negatively impacted new vehicle pricing in the country which has indirectly affected the rental rates of cars. But, the depreciation of the currency has aided the industry in some aspects as it has attracted tourists from foreign countries to come and visit SA. The car rental companies in the industry have been focusing on partnering with travel industry players in order to boost their sales. Over the review period, the industry witnessed the entry of peer-to-peer platforms such as Uber which has affected the short-term corporate travel. The new entrants have been witnessing intense competition from domestic car rental service providers, which have resulted in implementation of varied services such as chauffeur-driven services.
The report titled “South Africa Car Rental Market by Market Structure (Organized and Unorganized Sector), by Mode of Booking (Online and Offline), by Clients (Leisure and Business), by Pick-Ups (Airport and Off-Airport), by Car Type (Hatchback, Sedan and SUV) and by Major Regions – Outlook to 2022” by Ken Research suggested that growing demand for online booking applications backed up with market penetration in untapped markets will majorly contribute to the overall revenue growth of South Africa car rental market in next 5 years till 2022.
Ankur Gupta, Head Marketing