The South America Car Rental Market is anticipated to expand at a high CAGR over the forecast period (2025-2030).
The South American Car Rental Market is currently navigating a period of intensive modernization, characterized by a fundamental shift from traditional vehicle ownership toward "mobility-as-a-service" (MaaS). This evolution is most pronounced in the Southern Cone, where macroeconomic volatility and the high cost of vehicle acquisition have redirected consumer and corporate demand toward flexible, short-term rental solutions. The market has matured into a technologically sophisticated sector, where operational efficiency and digital accessibility are the primary determinants of competitive advantage.
Regional demand is increasingly dictated by the "uberization" of transport, where a significant portion of the rental fleet is utilized by independent contractors for ride-sharing platforms. This synergy between car rental companies and mobility tech firms has stabilized demand during traditional off-peak tourist seasons. Furthermore, the market is benefiting from a robust recovery in international inbound tourism, particularly in Argentina and Colombia, where travelers prioritize independent mobility over public infrastructure. This shift is supported by substantial government investments in road connectivity and the expansion of secondary airport hubs, which have opened new regional nodes for rental service penetration.
Growth Drivers
The primary growth driver in the South American car rental market is the expansion of the corporate fleet outsourcing model. Companies in Brazil and Chile are increasingly moving depreciating assets off their balance sheets, opting for long-term rental and subscription models that include maintenance and insurance, thereby driving sustained B2B demand. Additionally, the surge in domestic leisure travel has created a "road trip" culture in the wake of improved infrastructure, significantly increasing the demand for SUVs and MUVs for outstation travel. The proliferation of low-cost digital booking ecosystems has also democratized access, allowing a younger demographic to bypass traditional credit barriers through app-based, contactless rental starts.
Market expansion is currently constrained by high interest rates and currency fluctuations, which elevate the cost of fleet financing and, consequently, daily rental rates. In Argentina, hyperinflation remains a significant headwind, complicating long-term pricing strategies and decreasing the purchasing power of local consumers. However, these challenges have birthed a major opportunity in the used car sales (Seminovos) segment. Rental leaders like Localiza utilize their high fleet turnover to dominate the high-quality used vehicle market, creating a dual revenue stream that offsets rental volatility. Furthermore, the nascent shift toward fleet electrification presents an opportunity to capture demand from ESG-conscious corporate clients, despite the current regional deficit in charging infrastructure.
The supply chain for South American car rentals is inherently tied to the regional automotive manufacturing hubs in Brazil and Argentina. Key dependencies include the production capacity of OEMs such as Volkswagen, Stellantis, and Toyota, which provide the bulk of the "Economy" and "Executive" fleets. Logistical complexities arise from the distribution of spare parts, which are often subject to import delays, impacting fleet uptime. To mitigate this, major rental firms have established proprietary maintenance networks and centralized distribution centers in São Paulo and Córdoba. The supply chain is further influenced by the secondary market liquidity, as the ability to efficiently offload vehicles after 12–18 months is critical for maintaining a healthy capital structure.
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Jurisdiction |
Key Regulation / Agency |
Market Impact Analysis |
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Brazil |
IPI (Tax on Industrialized Products) Reductions |
Fleet Expansion Incentive: Reductions in IPI for rental-specific vehicle purchases lower the CAPEX for operators, allowing for more competitive daily rates and stimulating higher demand through lower consumer pricing. |
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Argentina |
BCRA (Central Bank) Currency Controls |
Pricing Volatility: Constraints on accessing foreign currency for importing premium vehicles or parts lead to a shortage of "Luxury" and "SUV" segments, shifting demand toward locally manufactured economy models. |
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Colombia |
National Tourism Law (Law 2068) |
Tourism Demand Catalyst: Incentives for the tourism sector, including VAT exemptions for certain services, directly increase the volume of airport-based rentals by reducing the total cost of travel for international visitors. |
The Economy Car segment remains the bedrock of the South American market, specifically designed to address the needs of the price-sensitive "Mass" market and the burgeoning gig economy. This segment is driven by high fuel prices and the necessity for fuel-efficient mobility in congested urban centers. Ride-hailing partnerships heavily influence this demand. For instance, companies like Localiza have dedicated fleets for Uber and 99 drivers, providing a reliable, low-maintenance option for those who cannot afford vehicle ownership. This "professionalization" of the economy segment has led to the adoption of telematics and real-time monitoring to manage wear and tear. Furthermore, the economy segment serves as the primary entry point for leisure tourism in regional clusters, where the lower daily rental rate allows for longer-duration bookings, averaging 5.4 days per transaction.
The Online Booking segment has effectively redefined the consumer journey in South America, driven by the transparency of "aggregator" platforms and the seamlessness of proprietary mobile apps. High smartphone penetration across Brazil and Chile has made mobile-first loyalty programs a critical growth driver, with over 60% of online bookings originating from returning customers. The shift toward online channels has enabled dynamic pricing models, where algorithms adjust rates in real-time based on local demand spikes, such as Carnival in Brazil or the ski season in the Andes. This technology-led approach has also facilitated the rise of contactless rentals, where customers bypass the counter entirely. By reducing "wait-time" friction, online platforms have unlocked new demand from "time-poor" business travelers who prioritize efficiency over personalized human interaction.
As the regional leader, Brazil’s market is characterized by a strong B2B orientation, with fleet management (Gestão de Frotas) representing a high-margin growth area. The market is highly concentrated in the Southeast region (São Paulo and Minas Gerais), which acts as the hub for both corporate activity and tourism. The market trend is currently pivoting toward subscription models (Carro por Assinatura), as urban residents seek to avoid the high taxes and insurance costs associated with private ownership.
The Argentine market is highly bifurcated between international tourism in Patagonia and corporate activity in Buenos Aires. Despite the macroeconomic environment, the rental market has remained resilient due to the "dollarization" of tourism revenue. There is a specific demand for 4x4 SUVs in the southern regions, where rugged terrain and long-distance travel are common. However, local demand is often stifled by high inflation, leading to a focus on short-term, essential-use rentals.
The South American competitive landscape is marked by a unique dynamic where localized powerhouses frequently outperform global incumbents through superior regional distribution and "Seminovos" integration.
Localiza is the undisputed market leader in South America, operating a massive network of over 600 locations. Following its historic merger with Unidas, Localiza has achieved unprecedented scale in both rental and used car sales. According to its 3Q25 financial results, Localiza reported a strong net income of R$ 812 million, supported by its "Localiza Meoo" subscription service. The company's strategic positioning revolves around a "Life-Cycle" model, where vehicles are bought at high-volume discounts, rented for peak efficiency, and then sold through its proprietary "Seminovos" retail chain. This vertically integrated approach allows Localiza to maintain high liquidity and weather economic downturns more effectively than its pure-play rental competitors.
Movida, part of the Simpar Group, differentiates itself through a focus on innovation and premiumization. It was the first major Brazilian rental company to aggressively pursue fleet electrification, partnering with manufacturers like BYD to introduce EVs into its luxury and corporate segments. In its November 2025 earnings report, Movida highlighted a 28% increase in cash from operations, reflecting a strategic shift toward "higher-yield" segments like executive rentals and long-term corporate contracts. Movida’s "Movida Premium" sub-brand caters to the high-end market in major metropolitan areas, providing high-spec vehicles integrated with advanced telematics.
Avis Budget Group operates in South America primarily through a franchise and partnership model, allowing it to leverage local expertise while maintaining global brand standards. Avis focuses heavily on the Airport Transport segment, catering to international business travelers who value the brand’s global loyalty program and "Avis Preferred" digital experience. In recent years, the company focused on expanding its "Budget" brand to capture the growing value-conscious leisure segment in emerging markets like Colombia and Peru. Their strategic partnership with local operators ensures a wide geographical footprint without the heavy CAPEX required for wholly-owned fleets.
| Report Metric | Details |
|---|---|
| Growth Rate | CAGR during the forecast period |
| Study Period | 2021 to 2031 |
| Historical Data | 2021 to 2024 |
| Base Year | 2025 |
| Forecast Period | 2026 – 2031 |
| Segmentation | Type, Mode of Booking, Rental Category, Geography |
| Companies |
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By Type
By Mode of Booking
By Rental Category
By Geography