Renting a Car Instead of Buying One

According to *Khodrokar*, citing *Donya-e-Eqtesad*, as purchasing a car has become increasingly expensive and out of reach for some households, car rental is attracting greater attention as an alternative to vehicle ownership. The shift in consumer behavior is not limited to personal use, as some customers are also renting vehicles for their livelihoods, including passenger transportation.

Studies show that rising car prices have increased the overall cost of ownership beyond the initial purchase price. Insurance, repairs, spare parts and maintenance have all added to the financial burden. Under such circumstances, for people who do not need a car on a permanent basis, renting a vehicle by the hour, day or month can be a less expensive option than purchasing and maintaining one.

At the same time, for some people, a car is no longer simply a means of transportation but has become a tool for generating income, particularly as the cost of entering certain occupations, including passenger transportation, has increased due to higher vehicle prices.

On the supply side, the growing number of companies and individuals operating in the car rental sector, along with the expansion of rental options ranging from hourly and daily to weekly and monthly contracts, has also contributed to the development of the market. The wide variety of vehicles and rental rates has enabled the sector to serve a broader range of customers.

How Much Does It Cost to Rent a Car?

According to field observations, economical domestic vehicles are among the cheapest rental options in Iran, with daily rates generally ranging between 20 million and 40 million rials. Meanwhile, renting imported and locally assembled vehicles for personal or commercial purposes can cost between 50 million and 300 million rials per day.

The trend comes as a significant portion of Iranian households do not own a personal vehicle. According to recently cited figures on car ownership in the country, around 13.5 million of Iran’s approximately 27 million households do not own a car. This large potential customer base, combined with people who have postponed purchasing a vehicle due to rising ownership costs, has created significant demand for rental services.

However, the expansion of the car rental market has also been accompanied by higher operating costs. High inflation in vehicle repair and maintenance has increased expenses for rental companies and vehicle owners, with part of these additional costs ultimately being reflected in rental rates.

Nevertheless, when rental costs are compared with the expenses associated with purchasing, depreciation and maintaining a vehicle, as well as the rising cost of some alternative transportation methods, renting a car remains economically viable for certain consumers.

In other words, rising vehicle prices have made entering the ownership market more difficult while simultaneously encouraging consumers to pay for access to a vehicle without actually owning one, helping fuel the growth of Iran’s car rental market.

Rental Rates for Domestic Cars

A simple search on the internet reveals a wide range of hourly, daily and weekly car rental advertisements. Although prices vary across online platforms and rental companies, economical domestic vehicles such as the Peugeot 206, Rana Plus, Peugeot Pars and manual-transmission Peugeot 207 are generally among the least expensive options.

Daily rental rates for these vehicles typically range from more than 20 million to around 40 million rials. Last year, however, these rates could be as low as 10 million rials per day. In some advertisements, the Rana and Peugeot 206 Type 2 and Type 5 are listed at the lowest prices.

Hourly rental rates are also significant. For example, one advertisement listed the daily rental price of a Pride at 8 million rials, while a one-hour rental of a Peugeot 206 Type 5 was advertised at 4 million rials.

To gain a better understanding of rental rates for domestic and foreign vehicles, *Donya-e-Eqtesad* contacted one of the companies active in the car rental sector. According to a representative of the company, daily rental prices for foreign vehicles start at around 50 million rials and can reach approximately 350 million rials, depending on the make and model.

The representative also referred to the BMW 730, explaining that the minimum rental period without a driver in Tehran is three days, while the maximum period is one month, with the possibility of extension.

There are also certain requirements for renting the vehicle. Customers must be at least 22 years old to rent a BMW 730 without a driver in Tehran. The daily mileage limit is 100 kilometers, with additional charges applying if the limit is exceeded.

The rental price of a BMW for periods of three to seven days is around 330 million rials per day. For rental periods exceeding 30 days, the daily rate falls to approximately 290 million rials.

The Kia Sportage, meanwhile, is advertised at around 80 million rials per day for rental periods of three days to one week. For a one-month rental, the daily rate falls slightly to approximately 79 million rials.

Domestic vehicles also command notable rental prices. For example, renting a manual Peugeot 207 for three days costs approximately 34 million rials per day. For rental periods exceeding one month, the daily rate is reduced by around 4 million rials.

The Peugeot Pars is also available for approximately 30 million rials per day.

A representative of another car rental company explained that customers are generally required to provide a valid driving license with at least six months of remaining validity, a national identity card, proof of employment, a check or promissory note equivalent to the value of the vehicle, and a cash deposit.

The minimum rental period for self-drive vehicles varies across different cities but is generally two to three days.

Online classified platforms have also seen an increase in the number of car rental advertisements. For example, one advertiser has listed a Hyundai Sonata YF at 40 million rials per day, requiring a 1 billion-rial cash deposit and a 10 billion-rial check from the customer.

In another advertisement, a Peugeot 207 is available for 30 million rials per day, while a locally assembled Fownix Tiggo is offered at a higher rate of approximately 70 million rials per day.

Why Is the Car Rental Market Growing?

As noted, Iran's car rental market has been experiencing increased activity. To understand the reasons behind the expansion of this business, *Donya-e-Eqtesad* spoke with Hassan Karimi Sanjari, an automotive industry expert.

Karimi Sanjari noted that car rental companies have existed for many years and that vehicle rental is a common practice around the world.

“Car rental is a widespread business offered by major companies and is generally more cost-effective than using taxi services for periods longer than one day,” he said. “This activity has also become increasingly established in Iran over the past decade.”

Regarding the reasons behind the market's growth, Karimi Sanjari explained that rising vehicle prices have also pushed up the cost of public transportation, including taxis and ride-hailing services. As a result, renting a vehicle for longer periods can become a more economical option.

He added that some companies offer promotional deals that can significantly reduce rental costs in certain cases. At the same time, the growing number of businesses operating in the sector has created greater competition and encouraged companies to offer more competitive prices.

“Therefore, the growth of this market is the result of a combination of these factors,” he said.

Asked whether renting out a vehicle remains economically viable given the rising costs of purchasing and maintaining cars, the automotive industry expert said there is generally a specific relationship between a rental company's operating costs and its revenue.

“Naturally, when costs increase, rental rates also rise,” he explained. “Overall, as depreciation costs increase, their ratio to rental income is generally maintained within a reasonable range.”

He further noted that a vehicle does not necessarily stop generating costs simply because it is not being driven.

“Therefore, if such a vehicle is rented out, the income generated for its owner can help offset the costs associated with keeping the vehicle idle,” Karimi Sanjari concluded.