According to a new report by UnivDatos, the Japan Car Rental market is expected to reach USD million in 2033 by growing at a CAGR of 8.3% during the forecast period (2025- 2033).

Market Growth: There has been a clear growth in the Japanese rental car market, this is largely due to increased attraction to the flexible travelling arrangements on the part of both the locals and the international travellers.

Robust Rental Car Market around the Kanto Region: The Kanto region ranks high as one that generates high rental car demand mainly due to Tokyo’s thriving tourism and business scenes, as well as a well-developed transport infrastructure.

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Segment Dynamics: Small Cars/Hatchbacks rule the market because they are affordable and are designed for urban markets. Concurrently, ICE cars dominate the market, however, EVs are being attracted in part due to increased environmental consciousness.

Technological Integration: More digital technology and mobile apps are being used, and this makes it easier for customers to perform activities like ordering car rentals, at-a-distance surveillance of vehicles, and transactions.

The car rental industry is an essential part of Japan’s travel and transport ecosystem, which will allow for the availability of temporary vehicles for both domestic destination tourists and international tourists. Global needs of Japan rental car services cover a variety, including travelers who want to travel unaccompanied outside the city limits and business travelers who require vehicles for conferences and other events. The key growth of the market is based on such factors as vast inbound tourism, the attractiveness of independent driving, and the development of domestic tourism. The increasing number of tourists interested in major urban sites as well as rural destinations has caused an enormous rise in the rental car demand, for instance, in areas such as Tokyo, Osaka, and Hokkaido. In a more recent development, the market has shifted to favour eco-friendly moves as rental businesses have been encouraged to augment their inventory of vehicles with electric and hybrid models to fit the environmental awareness.

A notable development in the Japan rental car market is the acquisition of Smartbox by Nature Mobility in 2023. Nature Mobility, a leading player in the mobility-as-a-service (MaaS) sector, acquired Smartbox, a digital car rental and vehicle-sharing platform, to enhance its service offerings. This acquisition allows Nature Mobility to expand its digital infrastructure, integrating Smartbox's innovative platform for seamless car rentals and shared mobility services. The move is indicative of the increasing importance of technology and digitalization in the Japanese car rental market.

Going forward, the rental car market in Japan is likely to record growth as the influx of tourism from China, South Korea, and the United States improves. From time to time, Japan will be faced with an increase in tourism because China will undergo in growth of its middle class and an increase in international travel. Deriving strength from the area’s physical closeness and common heritage, travel from South Korea will aid Japan’s rental car market, which will also benefit as a result of the United States’ robust business and vacation industry. The rapid inflow of international clients, plus Japan’s surging domestic tourism, is likely to increase rental vehicle demand. In response to its expansion, the rental sector might extend availability of digital interfaces, promote green cars, and offer alternatives such as car sharing and subscription, among other ventures, to cater to the tastes of Japanese and international guests.

Segments that transform the industry

Based on Booking Type, the market is bifurcated into Offline and Online. Among these, the Offline segment is leading the market. In the offline rental car market of Japan, the major factors are the desire of customers to have direct face-to-face service, facilitation of immediate vehicle availability, and the guarantee provided by personal contact. It is not unusual that tourists, mainly from Japan, get some comfort from talking directly to staff at rental desks to confirm minor details on a vehicle, insurance, and rental for short-term. Customers’ advantage through offline channels is that they will get the opportunity to view the vehicles first-hand before renting them. Apart from that, placing rental counters in locations such as airports, train stations, and destination hotspots answers the call for emergency rentals, thus sustaining the demand for offline rentals. While digital channels have advanced, the offline segment remains important due to its one-on-one interaction, quick and reliable provision.

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According to the report, the impact of Japan Car Rental has been identified to be high for the Kanto area:

The Kanto region dominated the market. The fact that Tokyo is Japan’s number one tourist resort and a top entry point for international travelers means very high demand for rental cars in the Kanto region. Being the home of Japan’s business and culture hotspot, the city of Tokyo attracts millions of tourists, so the need for flexible and helpful transportation solutions grows. Having life in the busy city and the presence of big business areas brings the need for rental cars for personal and corporate movements in the region. Besides, the extensive transportation network of Kanto’s region, with airports such as Narita and Haneda, makes it an easy takeoff point for tourists traveling throughout Japan. Because of its high degree of tourism, business requirements, and easy options for transportation, the Kanto area is identified by car rental companies as a top field market in Japan.

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