Left to right: Tom Kontos of ADESA, John Healy of Northcoast Research, Tom Spagnola of OneTravel.com, Bob Barton of U-Save and Abhijit Pal of Expedia comprised the Wall Street panel.
With the exception of the post-Sept. 11 show, last year's Car Rental Show took place in what may turn out historically to be the industry's darkest hour. Funding was at a standstill. The global financial crisis was in full swing. The Chrysler bankruptcy was imminent, with GM soon to follow. A "staycation" was a kind term for kids jumping through the sprinkler in the backyard.
What a difference a year makes, as the industry has weathered its right sizing and is poised for recovery.
More than 500 professionals from the independent, licensee and corporate sides of the auto rental community convened in Las Vegas for the 2010 Car Rental Show with a renewed vigor, which was evident in the keynote speeches, educational sessions and on the expo floor.
The State of the Industry
The Car Rental Show, now in its 15th year, features keynotes and general sessions delivered the satellite view of the car rental industry from operational, financial and fleet perspectives.
Jeffrey Cerefice of Dollar Thrifty Automotive Group delivered this year's keynote address. Cerefice outlined the external forces that challenged the industry in the past two years, such as the economy's free fall, the financial market turmoil and credit crisis.
Cerefice said this "shock to the system" had the effect of a creating a "right-sized industry with pricing discipline ready to react to pent-up demand."
Though the changes are positive, it's imperative that operators stay ahead of the curve, said Cerefice. He cited the need for RACs to understand the migration to risk vehicles, the new role of lenders and the new OEM landscape. "They moved the cheese on us," said Cerefice. "It's a new game, and it's still evolving."
Cerefice highlighted the need for operators to exercise their remarketing muscles, which include investigating retail sales and online auctions. "Remember, you're in the used car business," he stressed.
Cerefice ended on an optimistic note. "The industry is healthier and more disciplined with fundamentals that bode well for our future," he said.
The Wall Street panel, assembled by John Healy of Northcoast Research, was comprised of players from different segments of the automotive industry, including fleet buying, remarketing and global distribution systems. The panel connected the dots on the car rental industry from a financial perspective.
Panelists outlined the many changes in the car rental business model compared to five years ago. Parallel to Cerefice's comments, the panel outlined the market forces that are enforcing a discipline on the industry, with positive effects on stock performance and the health of the public companies.
Healy pointed out that the market cap for public car rental companies collectively went from $555 million to $7.4 billion in less than two years. "There have been more gains in yield in the last 12 months than there have been in 12 years," Healy said.
"Our viewpoint is very positive on the industry," he concluded. "The industry is on track to correct its problems a year sooner than expected. It's an industry that is moving forward in the right way."
Mark Eckhaus and the team at Eckhaus Fleet rounded out the keynote presentations from the fleet perspective. Eckhaus preached asset lifecycle management, from fleet financing and planning to acquisitions and remarketing.
Acquisition costs continue to be a concern as manufacturers rein in rental fleet sales. "The car fairy didn't come last year and she won't come this year," warned Eckhaus. "You're not going to find many great deals, and there is a lot of new competition for used cars."
With the scarcity of available cars, Eckhaus stressed fleet planning well before acquisition and to get orders in early. "With good fleet planning you're going to make money," he said.