What About Us?

We are all watching the unprecedented change in the financial and auto industries. We hear daily about massive declines in retail auto sales, dealership closings and lenders stopping leasing, or only leasing on the highest of credit scores. Car manufacturers have announced plant closings and layoffs of salaried workforces and have gone to Washington to ask for a federal bailout. House Energy and Commerce Chair John Dingell, D-Mich., said the Treasury and the Federal Reserve could use the authority they already have to free up funding for automotive lending. Dingell and others said the need goes beyond the lack of loans for vehicle buyers to the need of federal money to maintain operations.

This begs the question, “What about us?”

We all operate in an environment of asset-backed lending. Whether you are an independent or one of the largest publicly held companies, we all need credit in order to obtain vehicles. If the government is going to support the financial community, the airlines, the manufacturers and suppliers, then why not car rental? Our industry is a major contributor to the tourism industry and a significant employer, as well as a significant provider of tax revenues to local and state communities. Our vendors and suppliers rely on many of us for their businesses to survive. Why aren’t we being considered in this “global bailout?”

We do ourselves a huge injustice by not collectively having one voice on these issues, but also for not addressing things that affect our industry and our ability to operate in the current environment. These are unchartered waters for all of us. Change—as both presidential candidates declared—is needed. Companies are holding on to cars longer than ever and often longer than they need to, which causes over-fleeting. Many can’t afford to absorb the losses from drastically reduced residual values, or in many cases, from being unable to finance the purchase of a car. Many simply cannot afford to dispose of the car because they are not sure they will have the credit facility needed to replace the car when it is time to seasonally fleet up.

Everyone is looking at their business model to find a way to cut costs, and, as in the airline industry, this could affect customer service. The “a-la-carte” approach of the airline industry is an act of desperation. One airline asked me to join their frequent flyer program and at the same time shot themselves in the foot when, after charging $15 to check a single bag, charged me $2 for a Coke on a four-hour flight. Wow, thanks, but I won’t be flying with you again. We need to control our costs as well. I will again ask: Why are we the only travel segment that does not take a guaranteed reservation from a customer?

New Web technology has brought out companies that monitor reservations and then rebook the consumer when others drop their rates—nice. Let’s put this in perspective: For each vehicle you rent, assuming 80-percent utilization, a three-day length of rental and a 30 percent no-show factor, hard costs for no-shows can easily be $60 per year for this vehicle. If you operate 2,000 vehicles, that cost is $120,000 a year; 20,000 vehicles costs $1.2 million. You do the math. This does not even consider the soft costs, or more importantly, customer service issues from fleeting problems related to no-shows.

I encourage you to join ACRA—let’s get our industry voice heard collectively. We need help from Washington as well. Contact Sean Busking of ACRA, who will help you draft a letter to your congressperson or senator addressing the issues that affect our ability to operate in the current environment.

Ask the question, “What about us?”

 



Bob Barton is the executive vice president and chief operating officer of U-Save Car & Truck Rental. He is also the current president of the American Car Rental Association (ACRA).

 

To subscribe to Auto Rental News magazine, click here.

Comment On This Story

Name:  
Email:  
Comment: (Max. 10000 characters)  
Please leave blank:
* Please note that every comment is moderated.

 
 

Newsletter: Sign up to receive latest news, articles, and much more.

Read the latest

Auto Focus Blog: A blog covering fleets, auto rental and the business of cars

What is Your Time Worth?

Personal observations of retail and travel transactions reveal just how much a consumer’s time is worth today, and how increasingly intolerant we are of inefficient transactions.

Safeguarding Your Business with Brokers

While the high-profile bankruptcy of Atlas Choice has left many car rental companies wary of working with brokers, rental companies can take steps to protect themselves and ensure a productive relationship.

My Number One Takeaway from ICRS 2017

This year’s International Car Rental Show (ICRS) opened the door to new business models facing transportation today — yet adapting to these new technologies is not the first key to survival.

Job Finder: Access Top Talent. Fill Key Positions.

>