The one-two punch of the industry downturn because of the COVID-19 pandemic and resulting supply shortage was enough to force many small businesses across the country to hand in their keys. But a few strategic moves from one business based out of Utah helped them hop, skip, and jump to hare-raising achievements despite it all.
Auto Rental News (ARN) sat down with Rich Guernsey and Alexis Mahlum, owners of Rabbit Rentals, to get the dirt on what they learned over the last year-plus.
A Switch to Contactless Service
As ARN reported last October, one transformative move the Rabbit Rental business made was pivoting to no-contact, self-service.
“I didn’t see a way that we could survive,” Guernsey recalls of the early months when the world shut down.
With a two-person staff and a small fleet, their worries mounted when they weren’t eligible for PPP assistance because of their status as a family-owned business. With some quick thinking, Guernsey received some concessions on payments and changed the insurance on the vans in their lot to inactive while they sat waiting for business to return.
With a few months to plan for their survival, Guernsey pulled the trigger on contactless service, which was an idea he had been thinking of already, that COVID made essential.
“When things started to turn around, we did it in a low-tech way,” he explains.
Keyless entry was added to each of the rental’s vans, and they texted renters where the van was located with the keys safely tucked inside the door and paperwork out of the way thanks to email, prior to their arrival.
“My gosh, it was a game changer for our business,” he says. “Even just thinking of the personnel cost and having one-on-one contact with customers, and the more rentals you get, the more time it takes. We have an automated system on our website to check availability and pricing, where we barely even need to take phone calls anymore.”
Since the transition, Guernsey says they’ve made minor adjustments to the new booking process, noting only one anomaly of an incident involving damage that they learned from — and key there is a renter’s responsibilities clause in the contract that states damage caused during the rental will be charged to the credit card on file.
Securing and Sourcing Vehicles in a Tight Supply Market
Pre-pandemic, the 4-year-old Rabbit Rentals had 10 vans in its fleet. Now, it operates 21 vehicles, with plans for 40 by next year. At one point, Guernsey said they actually became overextended.
“Truth is, if we had more vans this year, they would have all been rented consistently from June through August,” he says. “It was a tightrope we were walking, but we committed to go to extraordinary lengths to make sure we had vans available when we promised. I mean, our reputation was on the line.”
Guernsey acknowledges that the small size of Rabbit’s operation worked to their benefit in many ways — coupled with the fact that they only rent Ford Transits, meaning they can buy slightly used vans from consumers when needed.
Another high standard for Rabbit Rentals is cleanliness and quality for every rental vehicle. “We spend a lot of time making sure that everything is perfect before a van goes out on a rental,” he adds.
Working with an FMC
“We started this company by buying used vehicles, renting them for a year or two, then selling them,” Guernsey says.
With no ability to buy vehicles wholesale, that early strategy of purchasing retail meant selling them to whoever they could in the end. “We took a hit when we bought them, put a lot of miles on them, and I don’t even know if we were making any money, but that’s how we did it,” Guernsey recalls.
After a short time and some success later, Rabbit qualified to buy directly from Ford’s repurchase program, enabling them to bring in new vehicles at a lower overall cost. “But still, we didn’t have a lot of capital, and we had to borrow money to buy these things,” he says.
So looking for answers, Guernsey signed up for a webinar on surviving the pandemic, in which the speakers suggested contacting your FMC (fleet management company) to ask if they’d take some of their vehicles back. Not yet sure what an FMC even was, he noted the number shared for follow-up questions and, long story short, was hooked up with Merchants Fleet.
“By golly, that was a transformative issue for us at the time,” he says. “We were just getting ready to turn in the vans from Ford, and Merchants had beaucoup vehicles at amazing prices. That was a game-changer for us, because we were able to get a large credit line without having to put in large amounts of capital. They had vehicles coming out their ears, and we were able to take some of them in October 2020, and in hindsight I wish we had gotten more as now we want to hang on to vehicles.”
So, what’s next for this up-and-comer rental company? Guernsey says Rabbit Rentals is planning a major marketing campaign to get some of the winter business in Utah that they haven’t gotten in the past — thanks in large part to Ford’s new AWD Transit. With four in the fleet now and three more on order, they’re hopeful the new winter market will make up for the dip missed from summer travel.
With so much success already under their belt, the future for Rabbit Rentals sure looks full of hoppy trails.