The global car rental market will reach $124.56 billion by 2022, more than twice the 2016 reported value of $58.26 billion. The demand for economy cars will experience the fastest growth. Considering these facts, it's no wonder car rental companies are popping up everywhere. If you're ready to make an investment, consider starting a business in this niche.

Choose a Business Model

There is more than one way to run a car rental business. You can rent your inventory by the hour, by the day, by the week or even by the month. Another option is to rent cars for special events, such as weddings or bachelor parties. The business model you choose will determine your target audience and how much you can expect to earn.

Decide what types of cars you are going to rent; this depends largely on your budget. The most popular options are economy cars, executive cars, luxury vehicles and SUVs. Factor in insurance rates as well as the cost of repairs and maintenance. A luxury vehicle, for instance, will cost more to insure than a sedan.

Brainstorm ideas for your car rental business. Determine how much money you're willing to invest, how many cars you plan to start with and who your ideal customers are. You could provide one or more of the following services:

  • Leisure car rental
  • Corporate car rental
  • Car sharing
  • Party bus rental
  • Wedding car rental
  • Funeral car rental
  • Airport car leasing

Since some potential customers may not have a driver's license, you can offer chauffeur services as well. This may increase your revenue and allow you to reach a wider audience.

Have you ever used services like Uber, Lyft or Zipcar? Zipcar, for example, is a car-sharing service that provides on-demand vehicles, including vans and luxury SUVs.

This company and other similar ones are going to be your competitors and may force you to lower your rates. If you want to stand out from the crowd, you need to offer better services or get creative with your marketing efforts and product offering.

Register Your Business

In this industry, it's particularly important to choose an eye-catching name for your business. Ideally, it should be short, relevant and easy to pronounce. Next, choose a business structure for your car rental company, such as an LLC, a sole proprietorship or a partnership. Register for taxes and then obtain necessary licenses and permits. A surety bond may be required, too.

Get Adequate Coverage

One of the most important aspects to consider is how much insurance coverage you'll need. Liability insurance is mandatory in all states, but it provides only minimum coverage. To be fully protected, purchase supplemental insurance, such as collision coverage, comprehensive coverage and more. Request and compare multiple quotes from different insurers to get a good deal.

Choose a Location

In this digital age, most customers rent cars online or via mobile apps. However, they still need to physically pick up and drop off the cars. Therefore, location is everything.

In general, car rental companies operate near airports, train stations, hotels and other points of interest. A high-end location will be more expensive, but it may also provide greater exposure for your business.

Your marketing strategy will depend largely on your budget and the type of customers you're going after. Besides establishing an online presence, partner up with hotels, travel agencies and other local businesses. Advertise your car rental services in local newspapers as well as on radio and TV. Street banners are a great choice, too.

Research your competitors and try to beat their rates. Consider offering extras to loyal customers, such as free rides or gift baskets. Attend tourism and travel events in your area to build partnerships and promote your services.