The growing concern and awareness of lower emissions have mostly led to the increase in vehicle rental options, where car rental and carpooling significantly help reduce the number of cars on the road. Brazil has been witnessing an increase in tourism, resulting in the growth of the car rental market.
The passenger cars and light commercial vehicles occupy the major chunk of the rental market. Also, car rental also provides the option of increased mobility without paying the costs associated with car ownership.
The vehicle rental services are offered via websites and through other online platforms, thereby boosting the growth of the vehicle rental market. However, increased operational costs have hindered the growth of the market.
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Instability in Brazilian Economic is Hindering the Market Growth
The market is expected to register a weaker growth rate owing to the present economic instability (primarily inflation), coupled with the decrease in the demand dynamics of the market. The fleet market in Brazil has undergone particular challenges in the recent past due to the tentative economic landscape in the country.
The strategy of the government in 2013 to stimulate consumption through a tax reduction temporarily caused a significant extent of depreciation in the value of pre-owned cars, making the purchase of new vehicles easier. This had a strong impact on the fleet management business and car rental markets, where the fleet management companies witnessed their assets losing value, forcing them to reduce their charges for the vehicles.
The automotive industry is a significant segment of the Brazilian economy. With a population of 209 million people, Brazil is considered the largest fleet market in South America.
The Brazilian automotive market dwindled by 12% in 2016. The idle manufacturing capacity for the automotive industry is around 40-45%.
The consumer confidence in Brazil has been very low, ever since 2008. Recent studies have stated that Brazilian people have the money to buy, but are fearful of losing their jobs and are therefore scared of spending money.
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Key Developments in the Market
- December 2017: Cia Lease of the Americas is a Brazilian rental car firm announced a tie-up with rival Unidas SA to create Brazil’s second-largest car rental company.
- March 2017: Cia Lease of the Americas acquired smaller rival Auto Ricci SA. Cia Lease of the Americas has acquired the 33.7% stake in Ricci for approximately USD 16 million
AVIS BUDGET GROUP INC., BUDGET CAR RENTAL, CARTRAWLER, ENTERPRISE HOLDINGS INC
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