Iceland’s Car Rental Market Sees Significant Surge as New Vehicle Registrations Double in January: All New Updates You Need to Know – Travel And Tour World

Published on February 3, 2026
With the arrival of the New Year, the Icelandic tourism sector has seemed to experience growth, reflected in the remarkable number of new vehicle registrations for January 2026. The Icelandic Association of Automobile Manufacturers claims new vehicle registrations for January 2026 more than doubled when compared to January 2025. The growth in the new registrations was largely driven by the country’s rental vehicle companies, suggesting that tourism in Iceland will continue to grow in the months to come.

Increase in New Vehicle Registrations Driven by Rental Companies

From January 2025 to January 2026, passenger vehicle registrations in Iceland grew from 670 to 1385. Rental vehicle companies registered a staggering 963 new vehicle registrations in January 2026 alone. This was an extraordinary increase, as rental companies alone accounted for more than six times the new vehicle registrations in January 2025.
The surge in vehicle registrations, especially for rental businesses, coincided with the country’s tourism industry gearing up for peak seasons. While the various factors contributed to this growth, the most notable one is the increase in imports prior to the New Year. Aggressive vehicle imports were coupled with registrations before the New Year due to an increase in excise duties, which caused preemptive imports along with vehicle registrations before the vehicle tax changes.

Effects of Vehicle Registration Excise Duty Changes

According to the Icelandic Automobile Manufacturers Association, it is reasonable to conclude that the increase in registrations in January is directly related to the pending changes in excise duties. A number of businesses and rental operations took the opportunity to bring in new vehicles before taxes were imposed.

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To some extent, this reflects the demand surge for rental vehicles, which is approximately expected to continue increasing through 2026. The Icelandic tourism governing entity continues to receive and report significant interest in the country. Vehicle rental options to travel and view the unique and remote country offerings are becoming an increasingly available and popular travel option, especially for the tourists arriving to view Iceland’s beautiful and unique country offerings.

The Rise of Hybrid and Electric Vehicles in Iceland’s New Registrations

Iceland’s automotive industry is starting to see more registered hybrids and electric vehicles. New registrations in January showed 45.5% of new registrations as hybrids (45.5%) and plug-in hybrids (29.7%), which makes a shift to greener vehicles. It makes sense to see more greener vehicles in Iceland where there are both positive extrinsic and intrinsic motivating factors to purchase one.

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Fully electric vehicles also saw substantial growth in registrations, especially in and around the private buyer and non-rental company segments. 43% of single buyer registrations and 35% of company registrations were fully electric. This is a positive purchase in alignment with Iceland‘s efforts to sustain and reduce overall carbon emissions.

Rental Services in Iceland Show Important Developments for the Growth of Tourism

A good indication of the development of the tourism industry in Iceland is the positive and rapid increase in the number of rental service registrations and the reported growth in the number of rental cars. This is indicative of an increase in Iceland’s tourism levels. Rentable cars in Iceland are needed by tourists for them to be able to use the service to travel to the numerous beautiful locations in Iceland.
Finally, positive growth of the tourism industry is evidenced by the increase of registered fully electric and hybrid vehicles in the country, confirming its commitment to the provision of eco-friendly travel options to tourists.

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Tags: Europe, Iceland, nordic countries, reykjavik

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