How Car Rental Services Are Adapting to Changing Travel Habits in Japan

Market Overview

Car rental services provide temporary vehicle access to individuals and businesses for short-term or long-term use. These services offer a convenient alternative to vehicle ownership, especially for travelers, urban residents, and companies that require flexible transportation solutions. Rental fleets typically include compact cars, sedans, vans, and specialty vehicles designed to meet a variety of travel needs.

In Japan, the car rental market plays an important role in both domestic and international travel. While the country has a well-developed public transportation network, car rentals remain popular for trips to rural areas, tourist destinations, and regions where train access is limited. Visitors often prefer rental cars for flexible travel schedules and access to scenic or remote locations.

The Japan car rental market reached a value of USD 3.0 million in 2025. Looking ahead, the market is projected to grow and reach approximately USD 5.9 million by 2034, reflecting a compound annual growth rate of 7.46% during 2026–2034. Growth is supported by rising tourism, expanding mobility services, and increasing demand for flexible transportation options.

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Role of Innovation in Market Development

• Digital Booking Platforms and Mobile Applications

Car rental companies are adopting digital platforms that allow customers to reserve vehicles online or through mobile apps. These systems provide real-time availability, transparent pricing, and quick booking processes, improving the overall customer experience.

• Contactless Rentals and Smart Access Systems

Many rental providers are introducing contactless services, including digital check-ins and smart key access. Customers can unlock vehicles using mobile apps or digital codes, reducing waiting times and enhancing convenience.

• Integration with Mobility Services

Car rental companies are increasingly integrating their services with broader mobility platforms. Partnerships with travel apps, navigation services, and transportation providers help create seamless travel experiences for customers.

Japan Car Rental Industry Trends and Drivers

• Growth of Domestic and International Tourism

Tourism is a major driver of the car rental market in Japan. Visitors often use rental cars to explore scenic regions, cultural landmarks, and rural destinations that are less accessible by public transport.

• Rising Demand for Flexible Mobility

Urban residents and businesses are increasingly seeking flexible transportation solutions. Car rentals provide access to vehicles without the costs and responsibilities associated with ownership, making them attractive for short-term needs.

• Expansion of Self-Drive Travel Culture

Self-drive travel is becoming more popular among both tourists and domestic travelers. Rental cars allow travelers to create personalized itineraries and visit locations at their own pace, contributing to market growth.

Japan Car Rental Market Segmentation

By Vehicle Type

• Economy cars

• Compact cars

• Mid-size cars

• Luxury cars

• Vans and SUVs

• Others

By Booking Mode

• Online booking

• Offline booking

By Rental Duration

• Short-term rentals

• Long-term rentals

By End User

• Leisure travelers

• Business customers

By Region

• Kanto Region

• Kansai / Kinki Region

• Chubu Region

• Kyushu–Okinawa Region

• Tohoku Region

• Chugoku Region

• Hokkaido Region

• Shikoku Region

This segmentation highlights the various vehicle categories, booking methods, rental durations, and regional markets shaping the car rental industry across Japan.

Competitive Landscape

The Japan car rental market includes domestic rental companies, international rental brands, and mobility service providers. Competition is influenced by fleet quality, pricing, booking convenience, and customer service.

Companies that invest in digital platforms, contactless services, and diverse vehicle fleets are strengthening their positions in the market. Strategic partnerships with travel agencies, airlines, and online booking platforms also play an important role in expanding customer reach.

Market Outlook

The Japan car rental market is expected to grow steadily as travel habits evolve and demand for flexible mobility increases. Rising tourism, digital booking platforms, and the popularity of self-drive travel will support long-term market expansion.

As companies continue to introduce contactless services, smart vehicle access, and integrated mobility solutions, the car rental sector is likely to remain an important part of Japan’s travel and transportation ecosystem.