Only around one in five people living in Tokyo own a car. There is simply not enough space in Japan's densely populated metropolises for private cars, which is why people rely on mass transit systems for transport. Most people living in highly urbanized areas in Japan do not need a car in their everyday life. For many other situations in which a car is necessary, rental car companies, and, more recently, car sharing companies, offer consumers convenient and comparatively cheap alternatives to a car purchase.
The rental car industry is well-established and growing
The rental car industry is well-established in Japan's mobility service ecosystem, with
its market size approaching the one trillion Japanese yen benchmark. Rental car companies cater to the demand of urbanites who have limited but highly specific needs when it comes to mobility. By far, the most common reason of Japanese consumers to rent a car was to obtain a mode of transport at the travel destination during leisure trips. Other motivations, such as for moving (changing residence), are also common. While most
vehicles available for renting are passenger cars, more than a third of Japan's rental car fleet consists of trucks. Almost every second Japanese consumer
has used a car rental service before, attesting to the high demand in society.
With the astronomical growth in inbound travelers, the car rental industry can also look forward to a new revenue stream as tourists might want to make use of car rental services to explore more remote areas of Japan by themselves.
Double-digit growth of the car sharing industry
The car sharing industry is still in its infancy, but
has experienced fast, double-digit growth during the past two years and is forecast to continue its growth in this fashion in upcoming years.
Japan's car sharing fleet is on a steep rise, more than quadrupling during the past decade. Although the penetration rate of car sharing is not nearly as high as that of car rental, the number of users increased tremendously recently, and will presumably continue to increase, as service providers improve on their infrastructure. Car sharing services are especially popular in urban areas
among younger generations.
Bright future for mobility service providers
The high population density and the resulting lack of space in Tokyo and in other highly urbanized metropolitan areas in Japan will not improve overnight. As the benefits of a shared economy become better and more broadly understood, the stars seem to align for mobility service providers. The car rental industry has already attained a secure position in the mobility service sector, catering to the stable demand for mobility during the travels of urbanites.
On the other hand, the car sharing industry might experience a meteoric rise, as, given the right circumstances, it might be able to rival taxi and similar services, offering cheaper and more flexible transportation options.
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