Mexico Car Rental Market Is Estimated To Witness High Growth
The car rental market in Mexico provides vehicles on rent for short as well as long term to individuals and corporate customers. Car rental services help travelers and tourists to explore different places easily without depending on their personal vehicles. The car rental companies maintain well-serviced cars in their fleet and offer it on rent along with insurance coverage and other assistance. The need for vehicles on rent has increased considerably due to rising tourism in Mexico.
The global Mexico Car Rental Market is estimated to be valued at US$ 1220.02 Mn in 2023 and is expected to exhibit a CAGR of 4.4% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The increased tourism in Mexico provides significant growth opportunity for car rental services in the country. Mexico has been one of the top tourist destinations globally and witnesses large footfalls of international as well as domestic travelers each year. As per the statistics, Mexico welcomed over 42 million international tourists in 2021. This continuous growth in tourist arrivals has translated into higher demand for rental vehicles. Tourists prefer renting cars to explore different cities and places in Mexico independently. The car rental companies can leverage this opportunity by expanding their fleet sizes as well as setting up new locations in prominent tourist destinations in Mexico to cater to the growing needs. This will allow them to grow their market share and boost profitability over the forecast period.
Porter's Analysis
Threat of new entrants: The threat of new entrants in the Mexico car rental market is moderate. Establishing a new car rental business requires substantial capital investment for fleet acquisition and maintenance. However, low brand loyalty and frequent price comparisons online have made it easier for new companies to enter the market.
Bargaining power of buyers: The bargaining power of buyers in the Mexico car rental market is high. Buyers have many alternatives to choose from and last minute deals allow them to negotiate better prices. They can also choose from a wide variety of vehicles depending on their needs.
Bargaining power of suppliers: The bargaining power of suppliers in the Mexico car rental market is moderate. While major fleet suppliers like automobile manufacturers have some control over pricing, rental companies try to negotiate competitive contracts and prices to manage costs.
Threat of new substitutes: The threat of new substitutes in the Mexico car rental market is low. Public transport is an alternative but does not provide the flexibility of self-drive options. Taxi cab services are substitute but more expensive for longer rental periods.
Competitive rivalry: The competitive rivalry in the Mexico car rental market is high due to presence of established global brands and local operators competing on pricing and service quality.
SWOT Analysis
Strengths: Mexico has a large tourism industry with over 40 million visitors annually providing ample rental opportunities. Most companies have nationwide coverage and access to international travellers.
Weaknesses: Higher operating costs compared to the US due to taxes and wages. Dependence on seasonal demand from tourism and events exposes cash flows to fluctuations. Lack of innovation and customer experience compared to ride-sharing alternatives.
Opportunities: Growing business and expatriate travel from US due to trade ties offers new customer segments. Online channels present opportunities for direct bookings and ancillary sales. Partnerships with hotels, airlines for bundled offerings can boost revenues.
Threats: Economic downturns negatively impact the discretionary tourism and business travel spending. Increased popularity of peer-to-peer rental platforms like Turo provide stiffer competition. Natural disasters like hurricanes can disrupt operations.
Key Takeaways
The Mexico Car Rental Market Growth is expected to witness high supported by a steady rise in tourism and business travel. The market size was valued at US$ 1220.02 Mn in 2023 and is forecast to reach US$ 1907.27 Mn by 2030, expanding at a CAGR of 4.4% during the forecast period.
Regional analysis
The Mexico City region dominates the car rental market in the country accounting for over 30% revenue share in 2023. It receives the highest number of both international and domestic visitors. States like Baja California and Quintana Roo are other fast growing markets led by beach destinations like Cabo San Lucas and Cancun respectively. These regions are expected to outpace overall market growth in the forecast period.
Key players
Key players operating in the Mexico car rental market are Cipla Ltd, Merck & Co., Inc., F. Hoffmann-La Roche Ltd., GlaxoSmith
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