Car Rental Boom Signals Strong Start to Iceland’s Tourism Year

2026-02-03 - 09:08

New vehicle registrations in Iceland surged in January, driven largely by rental car companies, official data shows. According to a recent article in RÚV, statistics from the Icelandic Automobile Manufacturers Association indicate that 1,385 new passenger cars were registered last month, more than double the figure for January 2025. What's the Story? 1,385 new passenger cars registered in Iceland in January 963 registrations by car rental companies, over six times more than a year earlier Private individuals registered 293 cars, down 10% year-on-year Plug-in hybrids (45.5%) and hybrids (29.7%) made up most new registrations Fully electric cars most common among private buyers (43%) and non-rental companies (35%) Eastward bound traffic from Reykjavík. Photo: Golli. Rental Fleet Drives Change Of these, 963 were registered by car rental firms, which accounts for over six times the number in January last year. The association says a significant rise in imports before the New Year, when excise duties rose, is likely to explain the jump. “It is likely that the increase in new registrations in January largely reflects this trend, i.e. is due to increased imports last year rather than being a sign of a significant increase in vehicle rental demand so early in the year,” the announcement states. Individual buyers registered 293 vehicles in January, a 10 per cent decrease on 2025, while non-rental companies registered 129 cars, up 12 per cent. Hybrid and plug-in hybrid vehicles were the most common among the newly registered cars, accounting for 45.5 per cent and 29.7 per cent respectively, a shift the association says was influenced by the recent excise tax changes. Fully electric vehicles were most popular among private buyers (43 per cent) and other companies (35 per cent). Cars parked in South Iceland. Photo: Joe Shlabotnik. Flickr. Looking ahead The increase in rental vehicle registrations may also have implications for Iceland’s tourism sector. A larger rental fleet can improve vehicle availability for visitors, particularly during the peak summer months when demand for transport around the country is high. While industry figures caution that many of the vehicles were imported before tax changes took effect, the expanded supply could help rental companies meet seasonal demand and support travel to regions beyond the capital area.