Car Rental Business in 2025: Key Trends Shaping the Industry

The Industry Is Mid-Transformation

Car rental as an industry went through a near-death experience in 2020 (Hertz filed for bankruptcy), a bizarre comeback in 2021 (used car prices exploded because rental companies sold their fleets and couldn't buy new inventory), and a prolonged pricing hangover from 2022 onward. The market has normalized somewhat, but several structural changes are permanent. Here's what matters for anyone in the rental space in 2025.

Peer-to-Peer Continues to Take Market Share

Turo has been growing consistently year-over-year and shows no signs of slowing. The total addressable market for car rental is enormous, and P2P platforms are capturing an increasing slice of it — particularly in the leisure and weekend-trip segment. Traditional rental companies still dominate airport business travel, but the tourist and personal-use segment increasingly prefers the P2P experience. This trend is structural, not cyclical.

Electric Vehicles Are Entering the Fleet

Both traditional and P2P rental fleets are adding EVs faster than at any point previously. Hertz's massive Tesla order (and subsequent partial reversal) was a cautionary tale about moving too fast, but the overall EV trajectory in rental fleets is clearly upward. By 2026–2027, EVs will be a significant portion of most major rental fleets. For P2P hosts, this creates opportunity — EVs command premium rates in most markets and demand is strong.

Contactless and App-Based Rental Is Now the Expectation

COVID accelerated contactless rental and that expectation is now permanent. Guests in the under-35 demographic in particular expect to be able to complete a rental entirely via app — booking, access, return. Traditional rental companies are catching up, but P2P platforms built this natively and it remains a structural advantage.

The Pricing War Continues

Traditional rental prices have partially normalized from the 2021–2022 peak but remain elevated compared to pre-COVID levels. P2P platforms consistently undercut traditional pricing, particularly for longer rentals and non-airport pickups. Price-sensitive travelers have discovered this and are increasingly defaulting to P2P for cost reasons alone, separate from any preference for the experience.

Subscription and Monthly Rental Growth

Monthly vehicle subscriptions — pay a flat fee, use a car without ownership commitment — are growing slowly but steadily. Platforms like Autonomy and several traditional brand programs are experimenting in this space. For P2P hosts, this creates an opportunity: monthly or long-term Turo rentals generate stable income with lower turnover costs. Targeting monthly guests is an underexplored strategy for many hosts.

Sustainability Pressure

Rental customers, particularly in certain demographics and markets, are asking about the environmental profile of their rental. Offering EVs or hybrids isn't just good for premium pricing — it's a genuine differentiator for environmentally conscious travelers. This will matter more over the next 3–5 years as the guest demographic shifts younger and sustainability becomes a more active booking criterion.