As 2025 closes out, the car rental industry marks a year with solid gains in fleet vehicle purchases and overall revenue.

The expected U.S. industry revenue for 2025 should be about $40.6 billion, up from $38.9 billion in 2024, according to the just-published Auto Rental News Fact Book. That’s a modest rise compared to the flatter revenue picture from 2023 to 2024.

Rental operations purchased an estimated 120,000 more new rental vehicles in 2025 than in 2024, with overall sales rising from 1.04 million to 1.16 million vehicles.

Amid a jagged, rocky economic picture, many customers are still traveling. Upper-middle-class and wealthy travelers drive most of it, underscoring that if you feel good about your finances, you are more likely to spend on experiences.

ARN’s bi-annual survey, just published in our 2026 Fact Book, offers some encouraging insights:

• Half of the surveyed operators expect their revenue per vehicle to remain about the same after 2025 closes out.

• About half of operators also expect revenue increases in 2026.

• 38% of rental car operators say the domestic economy is partially pressuring their revenues, while 33% report no effect.

• 38% also report no effects from tariffs, while another 38% did not see any effects in most of 2025.

The industry glass is definitely half full, if not slightly more. I like to compare it to having a 9-ounce glass of wine in a restaurant rather than the more pleasurable set of two 6-ounce glasses.

Factors At Play In 2026

With that sipped and done, here are some trends and challenges I see ahead for 2026:

• AI has been gradually moving into the back office and customer-facing functions of car rental companies. Operators are building on the contactless rental technology of the last few years, which enables customers to avoid the counter.

• AI now has the potential to transform and disrupt the traditional rental counter model of the entire industry. Car renters are increasingly impatient with waiting in line at a counter to complete paperwork for a rental car that may still require a shuttle ride to reach, as at the Denver Airport. Younger travelers, in particular, want the car to be hassle-free.

• AI has also turned into an enemy of sorts for car renters, getting slammed with damage fees for scratches, dings, and dents that AI detects and automatically bills them for damage costs. It’s been a media nightmare for the industry in 2025 and will be a topic at ICRS: How should rental companies balance AI with customer relations? What are some standards that could be applied? Is there an opportunity for independent car rental companies to be more flexible and therefore competitive?

• At the same time, more car rental companies are using the term mobility. They are exploring and pursuing the integration of rental cars, with car shares, rideshares, and hourly rentals, all complementing rental cars and designed to keep customers seamlessly mobile.

• Heavily discounted rentals are spooking the industry like never before, with $10 a day rates. Rogue and lowball operators are undercutting established rental car companies and franchises that seek to play by the rules and follow business plans that make economic sense. While those rates are deceptive, as car renters are heavily upsold for all kinds of add-ons, the industry will need to find ways to outsmart, upmarket, and trounce the discounters with aggressive messaging and exposure.

• Another challenge is EV adoption: Hertz has sold off the bulk of its fleet at huge losses due to consumer ire and fears about renting one in an unfamiliar place and then having to figure out when and where to charge it. But Ryde is entering the EV rental market in Singapore, suggesting future potential. What exactly needs to happen for more customers to rent EVs is a topic worth exploring and not giving up on.

A Future Scenario To Pivot Car Rental Experiences

When I envision how these trends and challenges unfold, along with the ceaseless advance of technology, I like to imagine a future scenario that captures the car rental industry:

You sit on a plane en route to a business or leisure visit to a non-home city. You open a rental app, reserve your car based on real-time AI-driven pricing, and complete registration and verification through digital portals. Then you land, get your luggage, walk out to a designated curbside, and your semi-autonomous hybrid, PHEV, or all-electric car rolls up and hands itself off to you.

Meanwhile, you only need the car for two days, so the rental provider remotely “picks up” the vehicle from your hotel and then connects you with rideshare and carshare ground transportation for the rest of your stay. For your return to the airport, the rental car company provides you with a driverless or chauffeured car.

By 2030, such a travel routine could become the norm in mobility, shaping the car rental industry. Until then, a crucible of vendors, suppliers, tech geniuses, and investors will have to collaborate to make it all happen.

For now, that points to a lot of educational content and session topics at the next International Car Rental Show, celebrating its 30-year anniversary. There’s no better place to anticipate and steer the future of the rental car industry.

Given the pace and timing of industry changes over the past 30 years, new breakthroughs such as AI, digital advances, and shifting customer tastes could drive as much comparable change in the next three years.