To thrive in their local car rental markets and compete against the major brands, the independents must adapt, especially when dealing with challenges created by the pandemic.
During the recent International Car Rental Show, the heads of four independent car rental companies took part in a roundtable seminar to discuss their specific trials in surviving the pandemic. Led by Sharky Laguana, CEO of Bandago Van Rental, these panelists also had the opportunity to share their outlooks for independent rental companies in this new environment.
Going forward, the biggest challenge for independents is going to be obtaining fleet. Michael DeLorenzo, senior vice president of NP Auto Group, said that his company hasn’t been able to get any new vehicles from its usual auto manufacturers. “And the ones that have agreed to sell us some cars, we won’t be getting any of them until January or February 2022.”
Independents like Dan Miller need to look at what the major rental companies are doing with their vehicle acquisitions. If the majors can get vehicles, how does that affect vehicle rates for the smaller rental companies? “When the big guys bring tons of cars into our markets and that impacts price, that’s an additional challenge,” said Miller, who recently acquired six Advantage Rent A Car locations.
Because there is a shortage of vehicles, many independents are having to run their vehicles to higher mileages. “I’m not sure that I’m comfortable keeping my cars to 60,000 miles or up to 88,000 miles,” said DeLorenzo.
For companies like Midway Car Rental that focus on VIP clients, running vehicles to a high mileage isn’t an option. “Our customers wouldn’t really put up with it if we rented them vehicles with high mileages,” said Brett Lippel, president of Midway Auto Group.
According to Lippel, Midway was able to expand its fleet through new partnerships (like with HyreCar), but the company has had a rough time buying big vehicles and SUVs.
To expand its fleet, NP Auto Group will be buying vehicles (that it thinks make sense in the used car market) while selectively extending the life of its current fleet, according to DeLorenzo.
“It will be difficult to acquire cars and you’ll have to pay up for them, but you can afford to,” he said. “You’re going to have unusually high residuals on the other side when you’re disposing of the cars because the long-term shortage of used cars will continue. Like my partner Bill likes to say, ‘there has to be a new car sold before you can create a used car.’”
Like many industries, the rental car industry is also facing a shortage of employees. According to Miller, simply raising the wage doesn’t seem to be helping keep or recruit employees.
“We are trying to be creative to create more opportunities for our employees,” said Miller. “We don’t necessarily have a career path like Enterprise, but we are giving employees different responsibilities that might be outside of what they signed up for to help them develop and reach their full potential.”
For Lippel, employee retention hasn’t been an issue; Midway has been opening new offices and promoting people. The real issue is recruiting. “We have an 80% to 85% no-show rate on interviews,” he said.
DeLorenzo agreed that recruiting has been very difficult. “Nobody is showing up for interviews,” he said. “We changed in-person interviews to telephone interviews to Zoom interviews, and the people still aren’t showing up for interviews, even on Zoom.”
Staffing shortages are also leading to longer maintenance times. “Because there’s labor problems at every vendor that you use, they have the same labor problems that we have,” said DeLorenzo. “Everything is slower. Even recalls are taking longer.”
In the U.K., rental companies are also dealing with limited vehicle supplies. Due to his company’s branding of offering an eco-friendly fleet, Richard Lowden has been able to increase his fleet size by purchasing large numbers of electric vehicles.
“We’ve been fortunate that a number of larger OEMs have made a dramatic shift toward electrification,” said Lowden, CEO and founder of U.K.-based Green Motion. “These electric vehicles are available. The traditional rental brands aren’t necessarily focused on taking large numbers of electric vehicles.”
Currently, electric vehicles make up 30% to 40% of fleets at some Green Motion locations.
Most independent companies don’t have the infrastructure to support electric vehicles. According to Lowden, the price point has come down over the last two years and it’s becoming easier to install.
“To help reduce range anxiety among customers, we ask them where they are going, what sort of mileage they will be doing, and we help them plan their trip,” said Lowden.
Want more car rental inside information? Save the date for the 2022 ICRS, which convenes April 24-26 at Paris Las Vegas.