Inbound travel demand to the US has fallen by up to 10%, and Americans are trimming their planned summer travel spending opting for road trips, according to CarTrawler, a B2B technology provider for car rental services in the global travel industry.

The company released its Car Rental Market Monitor for Q2 2025 on July 9, which underscores a period of great uncertainty in the travel marketplace. 

Uneven Travel Demand In Car Rental Market

After last quarter's Car Rental Market Monitor revealed car rental volumes in all markets growing in parallel with travel demand, Q2's analysis shows disparities in U.S. demand as well as intra-European growth. 

Uncertainty about American trade and travel policy appears to be driving this market disruption. This uneven demand is also reflected in the average price for a 5-day trip in July booked between January and June 2025, which is $531 in the U.S. (down 8% from 2024) and $309 in Europe (+1% YoY).

In the U.S., strong domestic travel is offsetting the drop in international arrivals, while increased intra-European travel, as some consumers choose to stay within Europe instead of traveling to the U.S., is helping keep the overall global market steady.

Inbound travel to the U.S. is softening due to new government policies and geopolitical disruptions, with Tourism Economics now forecasting a 9% drop in international arrivals for 2025, reversing its earlier projection of a 9% increase. 

Meanwhile, 42% of Americans plan to vacation within the U.S. in the next six months, and 70% of travelers are choosing domestic trips, boosting interstate road trips to top destinations like California, Florida, New York, and Texas. 

This supports projections for increased car rental volume within the U.S. during the summer travel period.

"Car rental holds steady despite macroeconomic uncertainty," said Gavin Sweeney, CarTrawler's chief revenue officer, in a news release. "Domestic road trips in the U.S. and strong demand for sun destinations across Europe maintain the global car rental market’s momentum.” 

Steady Demand for EV Rentals

While EV rental volumes remained largely consistent with first-quarter levels, demonstrating sustained interest in electric vehicles across markets, most notably in the U.S. and Canada. In North America, EVs made up 5% of all car rentals (up slightly over Q1). In Europe, they represented just under 3% of all rentals.

Tesla remains North America's most popular EV make and model, comprising 59% of all North American electric and hybrid rentals. There is more variety in the European and UK markets, with brands including Toyota, Kia, Polestar Renault, and Cupra each capturing double-digit shares of total EV and hybrid rentals. This trend is likely to continue as the influx of EVs from China, particularly from manufacturers such as BYD and XPENG, affects rental fleet composition and drives down EV prices.