The size of the South Korean rental car market has now surpassed 1 million units, shares Carmore, a rental car price comparison platform with 570 small and medium-sized rental car enterprises in 56 regions.
According to an analysis by the Korea Rent-A-Car Association (KRCA), as of the third quarter 2022, the number of rental car registrations in South Korea was more than 1.05 million. It has more than doubled in seven years since it surpassed 500,000 units in 2015.
Behind the growth of the South Korean rental car market is an increase in long-term rental demand due to delayed supply and demand of semiconductors and the development of carsharing services that grew through the COVID-19 situation. Additionally, short-term rental activation due to increased travel demand also affected its rise.
It's worth noting that the rental car market, which used to be a traditional offline market, is being reorganized around online platforms. Existing offline-based rental car companies are launching platform-specialized subsidiaries or collecting driving information through connected services to manage comprehensive vehicles. In addition, small and medium-sized rental car enterprises, which have digital transformation restrictions, are joining brokerage platforms to increase consumer contacts and strengthen customer convenience.
Demand is high for long-term rental cars that rent for more than a year due to both continued supply and demand issues, as well as vehicle consumption trends that seek experience over ownership. As the market players highlighted that consumers could get a new car right away by paying rent, individuals, not corporations, have emerged as critical customers, Carmore said.
Case in point: Lotte Rental's proportion of long-term rental cars for individual customers was only 33% in 2016, but soared to 37% in 2018 and 46% in the third quarter of this year.
According to Statista, a global market research firm, the penetration rate of the mobility industry in South Korea's carsharing market in 2021 is 4.39%. By 2026, it is expected to reach about $780 billion, which is 5.37% of the total.
Travel demand is picking up again due to COVID-19 becoming endemic. And, thanks to the short-term rental car market, it is also recovering. About 1,000 regional-based small and medium-sized rental car enterprises nationwide account for nearly half of the Korean rental car market.
According to Carmore, the number of rental car reservations increased by about 14% from January to October 2022. Furthermore, the number of overseas rental car reservations, averaging 52% every month since October last year, shows that South Koreans' travel demand has recovered.
Carmore provides 130,000 car rental reservation services to tourist attractions mainly visited by Koreans, such as Guam, Saipan, Hawaii, Japan, Australia, and New Zealand.