Start a Car Rental Business in 2023

A car rental business can be lucrative, but you need to take the right steps to make start a car rental business successfully. If you are looking to start a business in the automotive industry, you have many options including start a car rental business. But what exactly do you need to do to get this kind of business off the ground?

There are many things to consider, but taking the time to prepare and follow state and local guidelines, can help to start a car rental business. To help you prepare, we’ll create this guide on How to start a car rental business.

The Car Rental Industry in 2023

The global car rental market is booming. North America is the largest player, led by the United States. Overall, the car rental business will be valued at US$92 billion in 2021, the majority of which (US$57 billion) will go to travel. By 2027, the car rental industry is expected to be worth $140 billion.

Why You Should Start a Rental Car Business?

  • More and more people are buying economical small cars for their daily use. These people may require larger trucks or vans for special purposes.
  • You have always loved cars.
  • This is profitable.
  • You can start small and build up. You can start a car rental service with your one vehicle.
  • There are many options for the activity you choose. Car rental companies can specialize In car, classic, exotic, luxury car rentals, or van and van rentals.

How much it cost to start a car rental business?

Initial costs range from $50,000 to $100,000. There are differences such as the cost of rented or leased premises and the type and number of rental vehicles.

Start a Car Rental Business in Ten Simple Steps

Buying a franchise from an established company with a successful brand and business plans, such as Avis, Hertz, or Enterprise, can be considered buying an existing business. You can also buy a rental business. Or you can start your own business and adapt this proven organizational structure to your liking.

You can learn how to start a car rental business by following the steps of your choice. Here are some key steps for start a car rental business. 

Research Other Car Rental Businesses

As part of your market research, research other car rental companies and pay attention to the aspects of these companies that seem to fit what you are trying to do. For example, if you plan to offer classic or specialty vehicle rentals, you can modify your standard rental agreement.

Decide What Types of Vehicle Rental Business You Will Start

Car rental companies have historically served business travelers. However, according to statistics, the fastest-growing segment of car rental companies is tourists. If you have the opportunity to take over an existing rental car company, please exercise extreme caution. What is the reason for the sale? What is the year and mileage of your rental car? Is rental car business good? and what is the profit margin for car rental business? 

Determine Your Target Market

Before starting a new business, brainstorm what your target market will be. Before start a car rental business, it should be clear who will most often be in the driver’s seat. Short-term and/or long-term customers? Delivery or specialty vehicles? luxury car?

Choose a Business Name

Firstly check if the name is already in use. Also, choose a name that reflects your target market.

Write a Car Rental Business Plan

A business plan is similar to most business plans, but there are some important differences –

  • We need a strategy for cleaning and sanitizing vehicles at Covid levels. This is the standard you need to run a successful car rental business.
  • Your main expense will be the vehicle. The initial cost depends on how many cars you can buy.

Choose a Business Structure

Most newly formed car rental companies choose a limited liability company or LLC. These business structures protect personal assets.

Choose a Business Location

Car rental companies must be supported by a vibrant population. This is a also crucial factor to consider.

Another factor is the cost of vehicle registration and the business tax imposed on your business. This data is available from the Small Business Administration. The Small Business Administration has a good chart of these numbers.

For example, if your business unit is located in Vermont, the state imposes a 15% rental tax on your rental fee, plus a 9% surcharge and a 6% state tax. If you choose nearby Connecticut, there is no rental tax, 6.35% state tax and $1 per day state tourism fee.

Open a Business Bank Account

Open another business account with your company name and designated business credit card. Business accounts should always be kept separate from private funds/assets and accounts.

Sort Out Your Business Finances

If you are starting your own business, you will most likely need a business car loan.

Many car rental companies join car dealers to initiate sales or lease agreements. Using a local car dealership makes pickup and delivery more convenient. Of course, vehicle costs (business loans) are the biggest expense for small businesses in the region. Loans are expensive, but they are a good way to build business credit and support future fleet expansion.

Purchase Business Insurance

Insurance is also a big expense. At a minimum, you need public liability and commercial and comprehensive commercial vehicle fleet insurance. If you own or rent a site, you will also need property insurance.

Get Your Taxes in Order

An Employer Identification Number or EIN is required to form a legal entity. If you are a sole proprietor, you will also need this, as an EIN is required for state tax filing.

This may require using the services of business professionals such as accountants and business lawyers. The main taxes you have to pay are:

  • state taxes
  • workers compensation taxes (if you have employe)
  • tax fees Through localities, like cities and/or counties
  • Rentals from private property – must be reported per IRS Schedule C requirements

Build a Website

SEO (Search engine optimization) is crucial for any business website. If you don’t have the knowledge or time to do this, hire a professional. You want people to be able to easily find you through internet searches.

You also need a presence on various social media accounts such as Facebook, another source of potential clients.

Market Your Business

In addition to websites, social media platforms, and digital marketing, you can partner with local businesses. For example, a local lumber store or furniture store might issue cards to customers who need to rent a delivery vehicle, or an auto repair shop might issue cards to customers who need short- or long-term local rentals. Retain customers, but respond speedily to problems, especially breakdowns.

Is Car Rental Business Profitable

Start a Car Rental Business is Profitable. Car rental business profit margin – A low-end small car is $40 or more for a day, while a high-end car is $100-200 per day. Insurance premiums cost between $500 and $1,000 a month. Your monthly fleet cost depends on the number of vehicles you own.


When you’re just learning how to start a car rental business, the number of steps you need to take and the details you need to consider can be overwhelming. But with a little patience and attention to detail, you can make your car rental business a reality.

Also Read: Must Know About Competition In Marketing Plan

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