Paid car advertising in the US grew more than fivefold in 2016, according to a new study from Kantar Media/CMAG, as consumers are more willing to pay for a car to access the latest entertainment.
The report, titled Cars: 2017, predicts the market for paid car ads will increase by more than $2 billion in 2020, to $3.1 billion.
The study, which examined data from Kantars Automotive, found that a growing number of consumers were spending more money on car advertising than ever before.
Kantar’s research found that the average monthly cost of a car-rental-for-hire transaction increased to $947 in 2016.
That’s up from $826 in 2015.
That represents a 6.5 per cent increase in the past year.
The growth of car-sharing and other car-buying services has helped fuel the surge in car advertising spending.
Konstantinos Diamandis, senior vice president of marketing and research at Kantar, says the number of car rental agencies in the United States increased by about 25 per cent from 2015 to 2016.
“In general, the market has been trending toward the more personal, more personal-oriented car rentals, so that’s been a big driver,” he said.
“The car rental market is definitely still in a very robust growth trajectory, but we’re seeing a little bit of a lull in some of the higher end car rentals and other services.”
The report says the average cost of car rentals grew 4.6 per cent in 2016 to $812.
The average monthly rental fee for a sedan increased to about $3,400 in 2016 from $2,800 in 2015, with a 12 per cent bump in 2016 alone.
That translates to $4,150 per month.
The average monthly fee for an SUV increased to around $6,100 from $5,200.
The number of people renting a vehicle has remained relatively stable over the past several years, Diamas said.
But there’s been some improvement in the number renting cars in the last few years, he said, with more than a dozen car rental firms reporting increased revenues for the past four years.
“There is a lot of competition in the marketplace, and that’s driven the market to a more competitive level,” he noted.
Kantzar says that while car rental companies are now seeing increased growth in the market, there is a lack of competition.
The report notes that the number and types of rental services offered vary across the country, and the rental industry as a whole is still fragmented and fragmented.
“When you’re talking about the rental car industry, there’s a lot to keep an eye on,” Diamans said.