Car rental services involve the provision of vehicles for short-term use at a specified fee. These services are typically offered through local branches strategically positioned in high-traffic urban areas and near airports, often facilitating online bookings through their websites. Renting cars offers an economical alternative to vehicle ownership, particularly for those who use cars infrequently. It provides convenient access to a variety of vehicles without the long-term commitment of ownership.
Growth in the number of tourist visitors
The Japan car rental market is chiefly stimulated by the thriving tourism sector. Furthermore, the rising appeal of Japan as a travel destination for global tourists has significantly increased the demand for car rental services in the nation, contributing to Japan's car rental market expansion. Tourists frequently favour the convenience and adaptability provided by rental cars, enabling them to discover the country at their own speed and access remote destinations that might not be easily accessible through public transport. Consequently, car rental firms have experienced heightened reservations and augmented revenues stemming from the tourism industry. According to the Japan National Tourism Organization, in 2022, Japan welcomed a total of 3,831,900 foreign visitors, as reported by the Japan National Tourism Organization. This figure represented a remarkable increase, exceeding about 19 times the number of visitors recorded in 2021 which were 245,862 visits. The significant surge in international visitors during 2022 can be attributed to the relaxation of entry restrictions towards the latter part of the year.
Increasing popularity of online car rental services
Young people are becoming more and more enamoured with the online market. The online booking option offers the consumer a wide selection of luxury cars to pick from. Additionally, this class of vehicles makes reservations easier and is available all year long. It enables consumers to easily compare costs and provides details about the terms and offers related to the availability of luxury cars without making actual inquiries. Business owners may effortlessly manage all reservations with the online app reservation system. Online reservations are noted and handled specifically. Therefore, the expansion of the online segment is fueled by technological advancements and consumers who are using the internet more frequently. For instance, as per the 2022 report by Cisco, the percentage of internet users increased from 89% in 2021 to 94.4% in 2022.
Growth in product innovation
Major car rental providers like Toyota Rentacar, Nippon Rentacar, Orix Rentacar, and Times Car Rental, are gaining an advantage by implementing cutting-edge technologies, such as telematics, and novel business models, like car-sharing. Uber and Lyft leverage mobile technologies and gadgets to better meet the unique transportation demands of its consumers. Toyota Mobility Service Corporation launched Booking Car, a cloud service for corporate clients using company automobiles countrywide, and Toyota Motor Corporation confirmed that Toyota dealers and Toyota rental & and leasing agencies in Japan have started accepting applications. Since this service was introduced at TMS in November 2020, they have had requests from all around the nation to manage and present it, which has resulted in the nationwide extension of this service. About 200 businesses have contacted them with inquiries, and customers who have used the service already have given it great ratings.
Market strategies by key players
Major companies like Hertz and Europcar play a significant role in the Japan car rental market growth, the market is growing due to urbanization, changing lifestyles, and a preference for shared mobility over vehicle ownership. This shift is motivated by environmental concerns, cost savings, and the convenience of avoiding parking and maintenance hassles. For instance, Hertz has maintained a longstanding marketing partnership with Toyota Rent a Car in Japan. Car rental services cater to this trend by offering convenient and flexible transportation options. Additionally, partnerships with airlines, hotels, and travel agencies provide bundled services, enhancing the travel experience and boosting the Japan car rental market’s prospects.
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