The number of registered rental cars in South Korea has surpassed 1.2 million for the first time. This growth is attributed to an increasing number of consumers opting for long-term rentals and subscription services instead of purchasing vehicles, coupled with a surge in short-term rental demand during the summer vacation season.
According to the Korea Rental Car Business Association, the total number of registered rental cars reached 1,211,645 in the second quarter of this year, an increase of 42,510 vehicles, or 3.6%, from the previous quarter's 1,169,135.
Among rental cars, domestic models accounted for 1,152,487 units, making up 95.1% of the total. The most popular model was the Avante (CN7) with 68,707 units, followed by the Genesis G80 (51,613 units) and the Kia New Ray (57,16 units).
The growth of the rental car market is driven by rising costs associated with vehicle ownership and changing consumer preferences. There is a growing demand from individuals looking to reduce initial purchase costs and maintenance burdens, while companies are increasingly utilizing long-term rentals instead of buying vehicles, contributing to the market's expansion.
During the summer vacation season, rental car demand peaks, leading to high vehicle utilization rates. Lotte Rental, the leading rental car company in South Korea, analyzed vacation data from the past three years and found that rental car utilization rates in Jeju averaged in the high 80% range. During the peak season from late July to early August, rates surged to the mid-90% range.
A representative from Lotte Rental stated, "During peak season, we must wash and inspect vehicles immediately after they are returned to ensure they are ready for the next customer. Popular models like the Avante and Carnival are experiencing shortages due to high demand."
Over the past three years, the most rented vehicle at Lotte Rental's Jeju Auto House was the Avante, accounting for 18% of rentals, followed by the Carnival (10%) and Sonata (9%).
Long-term rentals are a key driver of stable growth in the rental car industry. Unlike short-term rentals, long-term rentals typically involve using a vehicle for three to five years. The steady increase in demand for corporate fleet vehicles and personal long-term rentals is boosting the overall market size. Lotte Rental's long-term rental share rose from 53% in 2022 to 56% last year, while short-term rentals slightly decreased from 11% to 10%.
Experts predict that the shift in automotive consumption from ownership to usage will continue to drive growth in the long-term rental market for the foreseeable future. Moon Hak-hoon, a professor at Osan University specializing in future electric vehicles, noted, "By utilizing rental cars instead of purchasing them, companies can reduce vehicle management and cost burdens, leading to a steady increase in long-term rental usage. Considering the domestic market size, it is likely to stabilize after reaching a certain level of growth."
* This article has been translated by AI.
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