People rent cars if that's the way they want their trip to go and the destination doesn't make it difficult.
A week in NYC or Paris? Of course not. But if you want to do a few weeks exploring western Europe, I think it's still the easiest way to go if you're not on your own, and you don't mind driving in an unfamiliar environment.
We drive a lot overseas. We like truly independent travel. We'll use public transport when we're too old to drive ourselves.