U.S. car rental: Cooling off or resetting the ride?

After reaching a record-breaking $26.9 billion in 2023, the United States car rental market tapped the brakes in 2024, slipping slightly to $26.4 billion. According to Phocuswright’s latest research report U.S. Car Rental Market Brief 2025, it’s the first revenue decline since the pandemic rebound—and a signal that the industry is entering a new, more measured phase. With rental rates softening and average revenue per day dipping a few percentage points, companies are shifting gears from high-margin pricing to tighter fleet control and long-game strategy.

The road ahead isn’t all smooth pavement. Inbound travel to the U.S. is forecast to drop by 9.4% in 2025 due to shifting U.S. travel policies, dimming demand in top tourism markets like New York and California. Meanwhile, the electric vehicle experiment revealed hard truths: higher costs, faster depreciation and aggressive automaker discounts added up to substantial write-downs across the industry. Even with a growing appetite for road trips, the outlook for airport rentals and international demand remains cloudy.

But the industry's not idling. Digital transformation continues to pick up speed as supplier-direct bookings now account for 44% of all reservations, with that share expected to rise to 47% by 2028. Rental brands are investing in app-based tools, digital keys and loyalty features to convert travelers from searchers into direct bookers.