The shift to Mobility as a Service (MaaS) will reshape the car rental market, meeting demand for flexibility, convenience and sustainability in a fast-changing sector.

Changing traveller expectations, legacy operational processes and increased competition are all key challenges.

A new report by Microsoft and travel technology firm Amadeus finds the industry faces a number of challenges as it undergoes huge transformation.

Demand continues to rise – Amadeus car rental data shows worldwide car bookings increased by 23% in Q1 2023 compared to the same time last year – but changing traveller expectations, legacy operational processes and increased competition are all key challenges.

Other obstacles are also appearing as the sector evolves and include emerging business models, disruption of supply chains, the sustainability curve, demand for seamless customer experiences and maintaining agile technology capabilities.

The Microsoft and Amadeus report highlights five top trends that are emerging and shaping the car rental market:

• MaaS connectivity – a single service that enables city-based trip planning, cost comparisons and purchasing. A competitive MaaS market can bring together services such as public transit, ride hailing, and bike sharing into one marketplace to help meet customer expectations for multi-mobility and sustainable options. This is particularly notable in a world where data suggests 70% of Gen Z don’t have drivers’ licences, and 30% never intend to get one.
• Agile competition – as business models shift from product-centric to customer-centric services, traditional car rental providers face strong competition as new providers offer flexible, convenient, and sustainable offerings.
• Evolution of autonomous vehicles – with the rise of AI and technological advances in AV (autonomous vehicle) fleets, it is more inevitable that these will become a reality. Alongside decreased demand from consumers to own vehicles, AVs offer a shared use mobility model.
• OEMs’ developing role – Carmakers are moving from being only automobile manufacturers into mobility solution providers. Through understanding their end users’ customer preferences, OEMs are finding new ways to reach customers with new offerings in sustainable and innovation technologies.
• Big data – increased use of data insights and AI mean car rental providers will be able to optimise their fleets, enable future forecasting and provide personalised customer experiences.

Peter Altmann, vice president, mobility and travel protection, hospitality at Amadeus, said: “The car rental market continues to evolve at a fast pace, and it is both challenging and exciting for the industry, as new players and models enter the space. What is clear from our research is that technology plays a central role in helping traditional and new car rental providers create the experience and travel that consumers want.”

To access the report, click here.