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A Seminal Moment for the Global Car Rental Industry

The car rental industry has a few problems it needs to sort out. In certain markets, worldwide customer service is suffering, especially in those with unsustainably low car rental rates, while competition from unscrupulous operators drags everyone down.

In the U.S., used car prices are driving up holding costs. The recall bill will soon become law with a system in dire need of fixing. And everyone is trying to figure out how Uber is affecting it all.

Is the sky falling? No, it’s not. If you surveyed operators 10 years ago, the problems would be different but just as “dire.” Understand that 10 years ago, we didn’t have the same connectivity and transparency surrounding these problems, whether domestically or globally. Today we do. The sky is not falling, yet there is a new awareness of these global issues.

The annual International Car Rental Show (ICRS), convened this week in Las Vegas, has evolved as the single most important platform to bring up these problems and begin to solve them. It’s a testament to ICRS that so many operators are willing to travel to Las Vegas from around the world to discuss the issues that affect their domestic businesses, which today are so much more intertwined globally.

This idea exchange is happening at ICRS, from the keynote addresses and exhibit hall interactions to the seminar Q&A’s and the cocktail conversations.

And, for the first time in the history of the car rental industry, directors of car rental associations around the world — from China, South Korea, Mexico, Brazil, New Zealand, Canada, and the U.S. — gathered for a meeting around the same table. Representatives from these associations shared overviews of their organization’s structure, constituency, mandates, and challenges.

The constituency makeup of each association speaks to industry differences globally. As we all know, the industry in emerging markets is less consolidated. Brazil, for instance, is home to about 60 car rental companies with more than 1,000 cars. In China, there are 30,000 car rental companies (not a misprint) for a total fleet size of only 550,000 units. South Korea — not an emerging market — has about the same fleet size, though only 15 companies run fleets of more than 3,000 cars.

Associations are also dealing with new business models under their umbrellas. South Korea has a robust carsharing market and a growing on-demand car rental platform. Chinese car rental companies, as well as those in South Korea and many Latin American markets, offer long-term rentals (commercial fleet in the U.S.). Some Chinese companies offer an Uber-like model with an owned fleet.

The dire Brazilian economy is affecting outbound tourism, felt in the U.S., specifically in South Florida. Fewer Brazilian operators were able to make the trip to Las Vegas — when your currency loses more than three to four times its value, business travel becomes a lot harder. Nonetheless, the Latin American meeting, now in its third year, had its largest attendance yet.

China is the giant panda in the room, and that panda is only getting bigger. Our Chinese delegation is now a staple at ICRS. China is the largest source of outbound tourism of any country in the world, the single largest source of car rental customers in many markets. On the operator side of the fence, the 30,000 car rental companies in China are only beginning to sort out the best way to run their businesses. Chinese car rental companies are pre-teens when it comes to working knowledge of the industry, and they come to ICRS eager to learn.

This information sharing was eye-opening and informative, and the meeting was the first step to formalizing open communication and sharing between the groups.

Companies in the mature markets are showing their younger siblings in emerging markets how to make money while behaving responsibly. Meanwhile, those younger siblings are teaching their older brothers and sisters about new mobility business models that could shape the direction of car rental.

Next year there will be new problems to be sure. The answers are never easy, but having a forum to discuss these issues eye-to-eye is the first good step to solutions.

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Author Bio

Chris Brown

Executive Editor

Chris is the executive editor of Business Fleet Magazine and Auto Rental News. He covers all aspects of the fleet world.

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