(MENAFN- GlobeNewsWire - Nasdaq) The UK car rental market presents opportunities in rising tourism and demand for sustainable travel. The shift towards electric and hybrid vehicles, paired with technological innovations like mobile apps and contactless services, offer competitive advantages, while flexible mobility solutions cater to evolving consumer preferences.Dublin, Oct. 31, 2025 (GLOBE NEWSWIRE) -- The "United Kingdom Car Rental Market, By Region, By Competition, Opportunities & Forecast, 2020-2030F" report has been added to ResearchAndMarkets's offering.
The United Kingdom Car Rental Market was valued at USD 7.15 Billion in 2024, and is expected to reach USD 13.16 Billion by 2030, rising at a CAGR of 10.75%
The United Kingdom car rental market is experiencing steady growth, driven by rising tourism, increasing demand for flexible mobility solutions, and a growing preference for short-term vehicle access over ownership. The market includes airport rentals, on-demand urban rentals, and long-term leasing services catering to both individuals and businesses.
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Technological advancements such as mobile booking apps, contactless services, and vehicle tracking systems are enhancing customer convenience and operational efficiency. In mid-2024, the British Vehicle Rental and Leasing Association (BVRLA) reported that the plug-in share of rental fleets (electric + hybrid) surged from approximately 3% in 2022 to 10% in 2024 - an impressive 200% increase.
Additionally, the shift toward sustainable transportation is prompting rental companies to expand their fleets with electric and hybrid vehicles. The market is highly competitive, with both international and domestic players offering diverse services.
Key Market Drivers
Growth in Domestic and International Tourism
One of the most significant drivers of the UK car rental market is the steady rise in domestic and international tourism. The United Kingdom, with its rich cultural heritage, historic landmarks, and picturesque countryside, continues to attract millions of visitors each year. Tourists, particularly international travelers landing at major airports like Heathrow, Gatwick, and Manchester, often prefer car rentals to explore regions beyond the reach of public transport. From the Scottish Highlands to coastal areas in Cornwall, car rentals provide the flexibility and convenience that many travelers seek.
Post-pandemic recovery has also led to a surge in domestic tourism, with more UK residents opting for "staycations" rather than traveling abroad. This trend has boosted demand for short-term car rentals, especially in rural and leisure destinations. Car rental agencies located in tourist hotspots and near train stations and airports have benefitted significantly.
Moreover, holidaymakers often seek out larger or premium vehicles for comfort, adding to the average revenue per rental transaction. An industry-wide trend in early 2025 shows rental prices in the UK stabilizing at around USD291 per booking, down from USD 347 in March 2023. Interestingly, while overall costs normalized, demand for premium (up 81%) and SUVs (up 51%) surging between March 2024-2025 indicates consumer preference for comfort over economy
Key Market Challenges
Rising Operational Costs and Fleet Maintenance
One of the most pressing challenges facing car rental companies in the UK is the increase in operational and fleet maintenance costs. The high cost of vehicle procurement, especially in the wake of global supply chain disruptions and semiconductor shortages, has significantly affected fleet expansion and renewal plans. The price of new vehicles has surged, making it difficult for rental companies to maintain a modern and diverse fleet.
In addition, ongoing maintenance, insurance, taxation, fuel expenses, and regulatory compliance contribute to the overall cost burden. The transition to electric vehicles (EVs), though necessary for meeting environmental standards, entails additional investments in EV infrastructure, such as charging stations and staff training. Smaller and mid-sized rental firms often struggle to keep up with these costs, affecting service quality and competitiveness.
Key Market Trends
S hift Toward Electric and Sustainable Fleets
One of the most significant trends in the UK car rental market is the accelerated adoption of electric vehicles (EVs) and other low-emission alternatives. With the UK government's commitment to phase out the sale of new petrol and diesel cars by 2035, rental companies are under increasing pressure to transition to more environmentally friendly fleets. This shift is also driven by consumer demand for sustainable travel options and the expansion of clean air zones (CAZ) in major cities like London and Birmingham.
Leading rental providers are investing heavily in electric and hybrid vehicles and forming partnerships with EV manufacturers to access newer models. Companies are also rolling out supporting infrastructure, such as on-site charging stations and mobile apps that help users locate nearby EV charging points. In addition, initiatives like carbon offset programs and sustainability certifications are being implemented to attract eco-conscious customers. This trend not only aligns with national climate goals but also serves as a competitive differentiator in the market.
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