Three Ways Rental Car Operators are Cannibalizing Future Profitability

Of all the complications that COVID has inflicted over the past 18 months, the automotive industry has been hit especially hard. Supply issues have led to inventory shortages, along with massive shifts in the labor market. Every operator is dealing with the same new reality: Uncertainty is here to stay. However, if you look closely, you’ll find an entirely new (and more profitable) model emerging. How can you capitalize on the new normal? Start by avoiding these three common pitfalls.

Abusing High-Mileage Cars

Where is the research proving that customers are unhappy because they got a high-mileage car? Is it possible they’re dissatisfied because the car smells like smoke, has a filthy windshield, or loose teeth in the cup holder (true story)? The universally accepted model has always been to ignore and discard high-mileage cars, but that practice may be costing you $1,200 in annual profit from reduced depreciation.

What you can do today: Restore every high-mileage vehicle in your fleet. New technology is available that completely removes odor, resetting the car back to a neutral factory state in minutes. Your customer’s first impression will be a positive one, and you can enjoy another 12 months of higher margins.

Chasing Yesterday’s Customer

Operators still spend hours every day dynamically managing prices, but COVID-era consumers are concerned about health and airborne contaminants. How many operators have you seen actively marketing their vehicles as “healthy”? Today’s consumer will likely pay slightly more to keep themselves and their loved ones safe.

What you can do today: Embrace the emerging customer expectations by promoting vehicle health, not just price. Differentiate your brand and your fleet by ensuring vehicles are thoroughly cleaned and deodorized (without dangerous machines from the ‘80s). Then shout about it on social media. Intentionally develop a following of healthy consumers who only rent from brands they trust.

Longing for the “Good Old Days”

Most operators are just holding on, waiting for “normal” to come back. By contrast, operators who lean into new customer priorities, employee needs, and market trends will find prosperity others miss.

What you can do today: Instead of looking at spreadsheets and emails all day, go out and speak with your customers and your employees. Ask them about the things that matter most to them now. Then, ask yourself how your own goals can align with theirs. Customer and employee loyalty is completely up for grabs, and will be awarded to those who adapt.

The Good News

These tactics are either free or very low cost, and they’re available to you today. Will you choose hope and luck? Or, will you choose a better way? A profitable future is yours for the taking.

About the author: Troy Blackwell, a 20-year automotive-industry veteran hailing from AutoNation and CarMax, is chief operating officer of NuVinAir Global, which offers a suite of patented and proprietary products that safely and effectively create healthy vehicle interiors.