Sharky Laguana (left), owner of Bandago Van Rental, moderates a discussion with independent car rental operators Dan Miller of Advantage Rent A Car (far right), Brett Lippel of Midway Car Rental (center) and Mike DeLorenzo of Nextcar. Appearing on the big screen was Richard Lowden of Green Motion, who joined the discussion remotely from England. - Photo courtesy Ross Stewart, RMS3Digital.

Sharky Laguana (left), owner of Bandago Van Rental, moderates a discussion with independent car rental operators Dan Miller of Advantage Rent A Car (far right), Brett Lippel of Midway Car Rental (center) and Mike DeLorenzo of Nextcar. Appearing on the big screen was Richard Lowden of Green Motion, who joined the discussion remotely from England.

Photo courtesy Ross Stewart, RMS3Digital.

We finally got back to Las Vegas for the International Car Rental Show. Inadvertently, we’d been planning this ICRS for two and a half years. Some stuff got in the way: a global pandemic, the worst health crisis in 100 years, travel at a standstill, furloughs, layoffs, car rental company bankruptcies.

Heading to Vegas, I wondered what the mood of the group would be — exuberant, or shell-shocked? After all, it seems we’ve lived a lifetime in that time. When I got up onstage to deliver some opening remarks, I thought I’d get a little verklempt, but instead, I got inspired. You’ll understand why.

What a difference 18 months makes. Last May, my conversations with car rental operators bordered on desperation. But last week, the operators I met in Vegas said they are thriving. I made light of this in my opening remarks by asking Rich and Alexis Guernsey, owners of Rabbit Rentals in Pleasant Grove, Utah to stand up.

In the second quarter of last year, Rich was trying everything to stay afloat. I included Rich’s efforts in a story on surviving the pandemic. He was initially hesitant to be included, writing:

“To be totally transparent... I still have my doubts about surviving this crisis. I'm not sure you would want to do a feature article on all of the great things we are doing to mitigate the crisis if we don't actually survive it.”

Rich emailed me a business update two weeks before the show. “We are doing really, really well right now,” he said. “We are operating 20 vans and are planning to increase our fleet size to 40 vans next year.”

Overall, prices are up an average of 25% to 40% in the past few months. Utilization is high (perhaps uncomfortably so). Demand — for leisure travel at least — is surpassing 2019 levels in many places. The used car market is astronomically strong, and so are per-unit revenues.

Vendors and car rental operators returned to in-person networking and business transactions in the show’s expo hall. - Photo courtesy Ross Stewart, RMS3Digital.

Vendors and car rental operators returned to in-person networking and business transactions in the show’s expo hall.

Photo courtesy Ross Stewart, RMS3Digital.

What was this elephant in the ballroom? Oh yeah, I haven’t yet mentioned the semiconductor chip shortages and supply chain disruptions.

Two months ago, the word was that fleet allocation to rental would be severely restricted through the first quarter of next year. At ICRS, the talk was to expect this to continue through all of 2022 and maybe into 2023. Just as the availability of semiconductor chips started to ameliorate, the latest delta-variant covid wave hit automakers and parts suppliers hard.

The announcement last week that Toyota needs to cut global output by 40% in September exacerbates an already fragile situation. Toyota, which had been able to avoid other automakers’ supply chain issues, said its North American operations will lose about 80,000 vehicles. This is just one announcement in a string of many from VW, Ford, and GM.

The auto industry lost about 3 million units of production in 2020 and may lose 3 to 4 million units when 2021 is in the books. Units that are available are primarily going to retail, sending fleet customers into a scramble. They’re paying more, a lot more. When the major car rental companies are paying hundreds over MSRP, you know we’re not in Kansas anymore. 

Yes, that’s a pretty big elephant.

But here’s why I’m inspired: Car rental is the most resilient sector in travel. I mentioned this in my opening remarks and the next few days in Vegas validated that statement.

Let’s face it, grounding an airplane, city bus, or cruise ship fleet is a lot more difficult than being able to sell vehicles into a used car market desperate for supply. And you can’t cut hotel room floors to match demand. Yet car rental operators are the best in the business when it comes to managing fleet, which is critical in their ability to weather this supply crisis.

At ICRS, operator attendees — competitors all — were rolling up their sleeves to collaborate on solutions. Some ideas:

  • Source fleet from other markets and ship them back on car carriers.
  • Turn your handful of dealer friends into 30 to 40. Work the phones.
  • Diversify into new automakers to mitigate unexpected issues such as recalls.
  • Be open to model types that are available that may not fit your fleet plan. Renters will take them.
  • Give your manufacturers’ reps and dealer friends your wish lists. Some wishes come true.
  • Look to remarket the cars with the highest aftermarket value — that extra premium will cover a lot of rental days — and keep the others in fleet.
  • Yes, you’ll be paying more — but trust the back end, the used car market will stay strong.

In one session, Helder Dias from Roam Rental, an Ace affiliate in South Florida, said he entices dealers with five used units if they can sell him five or more new ones. With high-mileage units a fact of life in the near term, Helder buys parts like tires, brake pads, and filters in bulk to save money and service units quicker.

Global crises have a way of accelerating the demise of some business types. What happened in the last 18 months proves that car rental isn’t one of them. In fact, the public now has a better understanding of the value of a rental car. But that doesn’t allow the industry to remain static in a new world of efficiency and digital transformation.

Discussions in other seminars centered on how managing fleet through connected cars is now essential, as are digital contracts. There were many versions of contactless rentals that took hold during the pandemic; some versions are sticking around. Operators are discovering that ancillary sales conversions in app-based systems are high. Keyless technology is now part of the conversation. Nothing like a global crisis to accelerate the embrace of new technologies.

We found out during the pandemic that the world still needs personal mobility. The entrepreneurs at ICRS are the providers. This has me inspired. I do hope Rich will get his hands on those extra 20 vans. I bet he’ll find a way, somehow.

Author

Chris Brown
Chris Brown

Executive Editor

Chris Brown is the executive editor of Business Fleet, Auto Rental News and Fleet Forward. Through these publications and related trade events, Chris covers all aspects of the fleet world, including fleet management, the new mobility ecosystem, manufacturer fleet activities, the fleet leasing industry, vehicle remarketing, and rental industry news.

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Chris Brown is the executive editor of Business Fleet, Auto Rental News and Fleet Forward. Through these publications and related trade events, Chris covers all aspects of the fleet world, including fleet management, the new mobility ecosystem, manufacturer fleet activities, the fleet leasing industry, vehicle remarketing, and rental industry news.

View Bio
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