How to Start a Car Rental Business in 2025 – A Comprehensive Guide

This digital era brought significant changes in almost every business sector, and we have all witnessed how it makes people’s lives far easier than traditional methods. In particular, let’s talk about the trending sector: car rental businesses. Many people have either started investing in such businesses or framing a plan about how to start a car rental business quickly and earning enough profit.

One of the most trending auto markets is car rental, where we have observed remarkable changes after COVID-19. The prime reason for the increase in the craze for car rental is that users who need to travel twice or thrice a week can use a car rental service, which helps them save on car maintenance costs.

Conversely, as the growth in the car rental sector increases, its controversy also impacts its competitors’ levels. Also, in the present market, we observed that a few car rental companies like Europcar and Hertz already work as major players. Also, from the data below, you can quickly gain insights into the marketing trends of the car rental business.

Source: Mordor Intelligence

Not only that, but a rising demand for the business inspired hundreds of entrepreneurs to start their car rental businesses. However, creating a business from scratch is challenging, and it demands in-depth guidance regarding its market, challenges, etc.

Thus, today, with this comprehensive article, we will take an in-depth guide on how to start a car rental company and impart a few effective tips you can implement while introducing your business.

What is a Car Rental Business? Why Are Entrepreneurs Investing More in Such Businesses?

Before proceeding with our discussion, that is, on how to start a car rental company, it is essential to cover basic knowledge regarding the car rental business. So, first of all, car rental is currently one of the highly growing sectors, with constantly increasing demand in the market. Numerous entrepreneurs have now started investing their funds in making a car rental business.

Generally, a car rental business offers services to its target customers for a specific duration. Users can rent a vehicle for various purposes, including business travel, or leisure travel, etc. Moreover, entrepreneurs who want to start a car rental business need to lease or purchase cars from car dealers or auctions, and they can rent those cars and make a good profit.

Also, it’s vital to know why people nowadays shift their minds towards establishing and investing more in the car rental business. Therefore, here we will also take a quick overview of all the important factors that grab the entrepreneur’s attention towards investing more in the car rental business.

Rapidly Increasing Market:

If we compare the entire auto market, we observe that the car rental market size is increasing daily. The significant reason behind this is the increasing number of travelers daily, which boosts the market size of the particular industry.

Huge Demand:

Also, the business covers a diverse customer market, including local travelers, business travelers, etc. So, it directly or indirectly meets its demand in the market.

Quick Entry:

Also, entrepreneurs planning to enter this market can easily start offering services by fulfilling the legal requirements.

Quick Profit:

Business owners can easily earn enough money through car rental; they need to frame well-planned strategies and manage them consistently based on their market demands.

Insights Into The Car Rental Growth & Its Trends

There was a time when people got frustrated while booking a vehicle or seeking rental services for a trip. But over the past few years, we have all observed how advanced technology entirely changed transportation standards. Now, people are easily able to book their rides or even schedule them later, along with scheduling their rental options.

If we focus only on the car rental market, then it’s one of the fastest-growing sectors compared to others. Also, several important reasons can boost the car rental market: the way car rental provides its users with more convenience and flexibility while traveling; the fact that users can rent a vehicle for a shorter period, too; and the constantly increasing number of travelers.

Also, if we consider the rental market, which is $104.40 bn as of 2024, it will likely increase by $124.10bn by 2029. The major reason behind this is the increasing number of business and leisure travelers.

Few Popular Car Rental App Worldwide

In today’s world, if we mark out the competitor’s level of the car rental providers, then there are a few top car rental service provider platforms giving tough competition to each other by adopting unique marketing strategies and offering their users the best of the best.

Zipcar

Zipcar is a popular American car-sharing firm founded by two entrepreneurs, Robin Chase and Antje Danielson, in 2000. The company is mainly located in Boston, Massachusetts, U.S. The platform is primarily known for allowing users to book vehicles hourly or daily through its smart app or website.

Later, on 14th March 2013, Avis Budget Group, a popular car rental agency, announced the acquisition of Zipcar for $500M. Currently, Zipcar is a subsidiary firm. Also, after the acquisition, the firm successfully served 1M+ users across 500 cities.

Turo

Turo Inc., previously known as RelayRides, is another well-known American car-sharing firm in San Francisco. Shelby Clark founded it. Turo mainly permits vehicle owners to rent their cars to users.

After its launch in 2009, Turo’s total investment was $52.5M between 2010 and 2014. Plus, Turo’s unique strategy has assisted them a lot in expanding their business; in 2018, Turo officially announced a new in-car device.

Getaround

Getaround is a car-sharing firm with three entrepreneurs. The firm 2009 started by connecting users seeking to book rides with car owners who wanted to rent their vehicles to earn extra money.

The firm gained wide popularity after winning the TechCrunch Disrupt New York competition in 2011, and in the next year, the firm started providing services in Portland, Oregon. Getaround covered a good market by serving areas like Chicago, Belgium, Austria, Spain, etc.

Europcar

Again, Europcar is one of the oldest car rental firms, established in Paris in 1949 by Raoul-Louis Mattei. The firm serves the market in 140 countries, including North America, Africa, Asia, and more.

Also, regarding firm acquisitions, the firm purchased many startups and known brands, including Ubeeqo in 2015 and Scooy in 2018. Later, in 2019, the firm also purchased Fox Rent-A-Car, which grabbed the high-level car rental market in the US.

Hertz

Hertz, previously known as The Hertz Corporation, is a high-demand car rental firm in Florida. It also comes in third position as the best car rental company in the United States, with 36% of the market share. The biggest reason behind the constant increase in the popularity of the Hertz platform is its wide range of fleet options available for its users; that is, users can now book any luxurious vehicle for their next trip.

Plus, if we talk about the Hertz serving area, then it grabbed a good market by serving its services to worldwide areas, including North America, New Zealand, etc. Moreover, Hertz rewards programs efficiently work to attract more users to their platform compared to other firms.

8 Steps Guidance on How To Start A Car Rental Business

Kick-starting a business from scratch is one of the challenging tasks, and if it’s about the car rental, then it requires complete attention and also important that all the planned strategies are implemented in the same way it’s decided; this little thing largely assists you in launching your business successfully.

Thus, we will share eight quick steps and guidelines on how to start a car rental business.

Determine Type of Business

The step to remember while creating your business plan is to determine the type of business model you require to start your business. This step plays a major role in giving your business a successful view.

The type of car rental business we discussed above is already a dealership, franchise, independent, or existing. Now, suppose you want to start your business with the independent model. It has its own rules and regulations, whereas the dealership type has a unique workflow. Therefore, it’s important to lock in any one type of car rental model based on which you want to start your business.

Select a Target Audience

After choosing a perfect business model, another vital point you need to consider is who you want to serve. That simply means who your target customers are. Generally, the car rental sector has a few focused customers: short-term or long-term rentals, etc.

Not only that, but a few people can select your rental companies based on the location, the services you are providing, the pricing structure, etc. So, you must consider all these things before opting for your target audience.

Analyzing Competitors

This is one of the essential steps to consider if you want to become a successful car rental service provider in the market. In that case, you need to take a deep dive into your competitor’s market by doing a SWOT analysis of their business strategies. Also, it is always better to understand the unique strategies they adapt to grab their audience, how they are marketing new things, etc., which matters a lot.

Business Development Plan

After analyzing the competitor’s market, now is the perfect time to develop your business plan, which includes the following;

• Giving a unique brand name to the business
• Framing an outline of your company goals
• Opting for perfect business structures based on your outlines
• Find the best location for your business
• Connect with the investors
• Finally, implement it in Real

Framing The Website

Today’s generation is more attracted to online platforms, so it’s very important to seek the help of professional developers. They will assist you in creating your personalized website by adding all the in-depth information regarding the services you offer customers and your company’s logo. They will also help you select your website theme color and more.

Securing Your Rental Vehicles

After successfully creating an official website, the next and very important step is where to buy a car. Here, purchasing a car and then renting it is one of the costliest options, which, as a startup, you need to avoid. Aside from that, here we are offering another three ways from where you can easily buy a car, including;

• Buying a car from car dealers by giving a down payment
• Another is an auction, where you are easily able to buy a vehicle at an affordable price.

Rental Agreement Procedure

As you are almost close to initiating your car rental business, wait. The most important stage is fulfilling all the legal requirements to be met while starting a business. Here, once you have finalized your entire business plan, now it comes to sign a car rental contract, which includes the following details;

• Overall details about your car
• Rental terms, including the particular period to use the car
• Several Mileage Limitations
• Charges
• Safety Points
• Fixed insurance amount that the renter paid for the car, etc.

Promoting Your Business

Finally, after completing all the legal frameworks, you can start your car rental business in the marketplace. After establishing your business, you can start promoting and advertising it to grab the target audience’s attention.

Now is the perfect time to promote your business. For that, you can use paid ads, SEO, and Email Marketing. Social media marketing is the most powerful tool for growing your market on multiple platforms.

Glimpse At Different Types of Car Rental Business Models:

We all know that before starting any business, it’s very important to know about various business models available to frame your dream business. Every business model has its specific purpose, benefits, and drawbacks.

Therefore, we provide in-depth details regarding four car rental business models. You can choose the one that fits your business strategy.

Independent Small Business Model

If you are planning to initiate your independent car rental business, this model is a perfect fit for your strategies. Generally, if you pick this, you can provide users with medium-range fleet options. However, the plus point for opting for this business type is that you can easily offer your users personalized services, as well, and you can quickly adopt all the latest market changes in your business.

On the other hand, starting a sole business might demand a high investment and even be filled with tough competition, which a startup may find difficult to compete in.

Existing business Model

If you choose this business model, the risk factors are increased compared to those of the independent small business model. The existing business has already been providing car rental services to users for a long time and has enough knowledge regarding users’ demands and preferences. These are a few things that play a plus point for you.

However, we all know that to run the company, an owner needs enough operating costs. They also make several important changes, like updating the latest function, installing various software, etc., which might be more costlier and time-consuming.

Dealership Model

This business type works better than the previous two, as here, you can easily partner with any local car dealers and provide car rental services to their end-users. Also, the biggest merit of this model is that it offers its users a range of vehicle options, along with several financial and additional service supports compared to others.

On the other hand, the disadvantage of this business model is that the cost of the vehicle might be higher than that of other rental service providers. Also, the dealer needs to suffer more during any fluctuation in the auto sector.

Franchise Model

One good option for initiating a car rental business is to acquire a franchise of a popular car rental business and start offering services under that particular brand name. In fact, many well-known car rental brands, like Hertz, Avis, and National Car Rental, are major competitors in today’s car rental market.

One of the benefits of this franchise model is that your brand business identity helps you easily attract users to your business. Also, the franchise already has years of experience in the particular industry, so they know every ups and downs of the car rental sector.

However, if you are planning to go with this model, you might need to pay high franchise royalties, and you will also have limited access to making decisions and making certain changes.

What are the Merits and Drawbacks of Building a Car Rental Business

One thing is clear: building any business from scratch has advantages and drawbacks. Let’s examine all the drawbacks you might need to improve while starting your car rental business.

Merits:

• It provides car rental services because it has a diverse customer market, including business travelers and local users who need to rent a vehicle for their trips.
• It’s obvious that as the demand for travelers increases, it will surely impact the demand for car rental providers to a worldwide level.
• Initiating a car rental business can be a helpful step for people who are unable to get jobs or who want to earn extra income.
• Also, you can easily able to generate a good amount of returns by implementing a strong planning strategy for any meeting the requirements of every type of user.

Drawbacks:

• Kickstarting a car rental business from scratch demands a high investment, and market research is mandatory.
• Nowadays, the car rental market is fully covered with competitors, so, being a startup, one of the biggest drawbacks you will surely face is the high level of competition.
• If you are starting your business without adding any long-term strategies, then your business might only last for a short period.
• As a startup, the important step is to gain your customers’ trust. To do that, you need to spend a lot of time, effort, and money promoting your business.

Major Challenges Faced By Entrepreneurs While Starting a Car Rental Business

Stepping into the practical world of establishing a car rental business from scratch is not easy. The starting steps are filled with difficulties, and to start your business successfully, you need to overcome all the challenges.

However, below, we have mentioned several basic challenges that most entrepreneurs face while starting their businesses.

Initial Investment

One of the biggest challenges that all entrepreneurs face while starting their businesses is raising funds. As we all know, a startup business requires a significant investment in purchasing or leasing a fleet, insurance services, marketing costs, etc.

Therefore, it’s very important to have a clear idea of the financial sources before framing a business strategy.

Maintaining Vehicles

It’s crystal clear that running the vehicle for a longer period will surely demand timely maintenance services, such as changing any parts of the vehicle. To eliminate this challenge, you can contact professional mechanical service providers and team up with them to maintain your vehicle.

Cut-Throat Competition

Cut-throat competition in a car rental sector, and as a startup, you might need to offer your users something unique.

For instance, you can start offering your customers a competitive price for better and quicker services, etc., to attract them to your business. Also, you need to promote your business strongly to stay at the top of the market.

How Much Cost Is Required To Start a Car Rental Company

Are you considering initiating your car rental business and need accurate cost information? If yes, you wanted to know the cost of starting a business. In that case, you will surely find the factors mentioned below, as they include all the essential things your business needs while framing out the cost plan for your business.

Types of Vehicle

The type of vehicle and the number of vehicles you select for your rental business greatly impact your expenses. As we all know, a higher number of vehicles requires high maintenance and investments, too. Therefore, investing in required vehicles in huge demand in your target market is always important.

Location

Another cost-affecting factor will be business location. If you plan to set up your business near the airport or in another high-profile location, it will cost you more, but on the other hand, it will help you make a profit from such a location compared to a remote location.

Legal Permission

A startup must follow strict legal procedures. If your business is related to a car rental, obtaining a license and permits from the legal authority is important. The entrepreneur must also fulfill certain criteria, including age restrictions and clear provider driving records.

Insurance

Another important factor impacting the cost of the business is insurance. It is vital to have good enough insurance coverage to protect your vehicle from damages, as well as accidents. Therefore, to get constant protection for your vehicle, you must pay several premium charges, which can be expensive.

Advertisement

After introducing a business to the marketplace, spending enough on advertising and promotion is a must. Also, while advertising your business, the Social media platform is one of the best ways. Moreover, you can also use word of mouth, email marketing, etc., to attract more users, which will surely cost your business more.

Repairing

A car rental business requires regular maintenance and provides time-being service as part of its regular expenses. However, aside from the regular services, you may also need to save some funds for emergency needs, such as repairing any damages in case of an accident.

Effective Tips To Successfully Launch A Car Rental Business

Now, we are sharing with you a few effective tips that you can implement while designing your car rental business.

Target Audience

Before initiating a business, it’s very vital to determine your target audience and their needs and requirements. For instance, if your target customers are local travelers, you need to frame your business based on that.

Use Advanced System

Add all the advanced functionalities to your service platform when introducing your car rental business. Also, ensure your customers respond more quickly than others, saving time and enhancing your user experience.

Competitive Pricing

Also, as a startup, it’s always good for your business to focus on your pricing policy. It must be flexible so users can easily change their pricing strategy based on market demand. Also, providing affordable services will directly help you connect with more users.

Build a Strong Team

A startup requires a strong team of staff members, partners, and service providers. So, selecting a dedicated team and maintaining a strong relationship with the providers is always best.

FAQs:

What cost is required to introduce a car rental business?

The cost of “how to start a car rental company” depends upon your market, but the starting cost is $99,000. However, prices might increase later based on location, types of business models, vehicle models, etc.

Are there any hidden charges to consider while building a car rental business?

Yes, definitely. There are many hidden costs that you need to consider while building a car rental business. For example, vehicle repair charges, sudden increases in premium rates, marketing costs, etc., are never going to be fixed within certain boundaries.

Do any risks cover the car rental business?

Several high-risk factors come along with your car rental business, including;

• A highly competitive market
• High repairing costs
• Cash flow issues, etc.

Conclusion

Finally, while providing a final touch to this comprehensive blog, we hope that you have gathered all the essential information on “How to start a car rental business” in 2025, with just the 8 easiest steps. Plus, to provide an in-depth guide, the blog also represents various types of business models that the entrepreneur needs to opt for while initiating their business plan.

Inspired by the above blog, many of you have already listed down developing points and are now seeking a developing firm to help you frame a suitable car rental app for your business.

You can connect with us, and we can help you with a readymade car rental script that is flexible enough for your branding and feature integration. It will help you easily launch your car rental business online and give you an advanced look at it.