Indonesia Car Rental market is projected to witness a CAGR of 13.71% between 2019 to 2025. Travel & Tourism Industry in Indonesia is a major contributor to the GDP and employment of that country. It has become a key focus area for the Indonesian Government’s growth strategy. To replicate the success of Bali as a tourist spot, the Indonesian government is keen to invest resources into the Travel & Tourism sector. It has also developed bilateral agreements with China and Japan for this purpose. The rising number of foreign tourists in the country is the major driver of the Indonesia Car Rental market. Indonesia's Car Rental Market is heavily dependent on the booming travel and tourism industry in that country. The number of international travelers arriving in Indonesia has been on a constant rise over the years, as can be in the graph below. This is expected to support the growth of the car rental market as travelers prefer booking cars in advance for their trips for the sake of convenience.
Economy cars holding a significant share in the market
By car type, the Indonesian car rental market is segmented as economy cars, luxury cars, sports utility vehicles (SUV), and multi-utility vehicles (MUV). The demand for economy cars has been steadily growing in the country on account of improving employment opportunities, leading to the growing individual’s ability to spend. In fact, unemployment as a percentage of the total labor force has reduced from 8.06% in 2007 to 4.375% in 2019 (source: World Bank). However, it is important to note that the quality of jobs has remained relatively low, thus, supporting the majority of the population able to afford majorly economy cars segment relatively to luxury cars, sports utility vehicles, and multi-utility vehicles as the rental of economy cars is relatively lower.
Car rental for leisure activities is anticipated to witness substantial growth over the forecast period
By application, the Indonesian car rental market is segmented based on leisure activities/trips and corporate business trips. The growing number of tourists in the country is expected to fuel the market demand for car rentals, propelling the market growth in the forecast period. Leisure trips are projected to hold a significant market share with the increasing number of tourist arrivals contributing to increasing the country’s GDP as well. Furthermore, corporate business trips are projected to grow with a high growth rate due to the prevalence of business travelers who are mostly from China for various meetings and appointments. Additionally, with Jakarta being one of the top convention destinations, hence, car rental services offer great market potential in the forecast period.
Online mode of booking is growing at a significant rate
By mode of booking, the Indonesian car rental market is segmented as online and offline. With the growing trend of cashless online payments worldwide, Indonesia lacks the cashless mode of payments. Hence, the market growth of the offline mode of booking holds a significant share followed by the online mode of booking. The market for online mode of payment is expected to propel at a significantly fast rate owing to the growing initiatives regarding a shift to the cashless mode of payment even though the country has a low bank account penetration which is around 34%. However, with the growing global digitization, the adoption of online mode of payments is being observed here as well where electronic modes of money transfer are coming up in the region. Major market players in the electronic payment mode include GoPay, T Cash, PayPro, and OVO.
The Indonesian Car Rental market has been segmented by car type, service, application, mode of booking, and rental category.
By Car Type
By Mode of Booking
By Rental Category
By Contract Type