Incumbent car rental companies are facing increased competition. There are now around 35 affiliate or franchised car rental companies operating globally outside of the major brands. - Chris Brown

Incumbent car rental companies are facing increased competition. There are now around 35 affiliate or franchised car rental companies operating globally outside of the major brands.

Chris Brown

As independent car rental operators navigate the evolving market, what factors are affecting car rental globally as well as in individual markets?

At the 2023 International Car Rental Show, a panel of car rental operators and fleet consultants offered insights into the main issues faced by the car rental industry, including supply and demand, customer needs, and the competitive environment. Then they discussed challenges in their own specific markets as well as elements that can help rental companies survive – and prevail – in the future.

Global Issues

Fleet supply is getting better in most countries, but it’s still a problem faced by some car rental companies.  

“In some countries like the Caribbean market, it’s still difficult to buy new fleet,” said Ammar Akhtar, founder and CEO of Finalrentals, a car rental brand operating in 25 countries. “Fleet supply is getting better overall globally, but it will take some more time.”

In Brazil, it’s expensive to buy cars, especially since the OEMs aren’t giving discounts to buy new cars like they have in the past.

“Brazil has some of the most expensive car prices in the whole world,” said Jorge Pontual, a representative from the Brazilian car rental association. “The cars are sold by the dealers, and we are having a hard time paying for them.”

Another issue faced by car rental companies worldwide is increased competition. “The overall pool of customers that require leisure or local neighborhood rental hasn’t particularly grown, but the number of car rental companies has grown,” said Richard Lowden, founder & CEO of Green Motion and president of U-Save. “There’s about 35 affiliate or franchised car rental companies operating globally outside of the major brands.”

Additionally, Lowden mentioned that adding other channels to sell your rental vehicles creates even more competition. “We are connected to 60 channels,” he said. “All of this competition contributes to driving rental rates down.”     

Over the past few years, the car rental industry has been facing higher prices across the globe, partially because of inflation. “You have high inflation and the cost of living increasing in many markets right now,” said Akhtar. “I believe that pricing across the board needs some correction; it’s still on the higher side.”

Rise in Franchises

Since launching in 2007, Lowden’s Green Motion brand has expanded worldwide with its franchise program; it currently operates in 60 countries with over 600 franchise locations.

“I think the franchise model works well if that franchisor is set up to support the franchisee across the spectrum of their business,” said Lowden. “That includes the systems and the training. We can support that independent operator that wants to go from being the neighborhood rental to expanding within a given region.”

For Green Motion, it looks for independent operators that haven’t worked with a franchise or other program before. “We help educate them on how to get more bookings. With the power of the Internet and using SEO, we help them get organic, direct bookings.”

Importance of Hands-on Customer Experience

Even with all the new technology and ability to do contactless rental through apps, it seems that the people connection at the counter still matters to some customers.

In Brazil, the traditional counter model still has a big market. “The smaller rental companies can give better assistance to their customers face to face,” said Pontual. “A lot of customers don’t like the contactless option of getting the car without talking to anyone.”

For customers traveling to a new destination, the first interaction that they have with that place is with the rental company agent. “They are unfamiliar with the location and just need some extra care,” said Lowden. “Rental car companies as a sector are truly customer centric.”

Green Motion wanted to keep the face-to-face counter interaction but speed up the process for the customer with its pre-registration process.

“We work with broker partners like Expedia to get our customer data ahead of time,” said Lowden. “After gaining permission to access that data, it gives us the opportunity to communicate with that customer before they arrive. In some of our locations, we’re achieving a threshold of 70% for pre-registration, meaning that the customers have already supplied us with their driver’s license, passport information, etc., and don’t have to do that at the counter when they arrive.”

Tips for Success in the Future

To continue to be successful in the rental car industry, Akhtar recommended using technology to help support the rental agent at the counter.

“Technology is the supporter and should never replace the human customer experience,” he said. “Technology can never replace that warm welcome and telling the customer the best places to see or the best restaurants to try. I think we have a great future if we keep a 100% customer-centric mentality.”

For David Donaldson, president and CEO of Practicar Car & Truck Rentals, branding is going to matter even more in the future.

“Being in the franchise business, I need to pay attention to what I’m doing with my brand,” he said. “We’re trying to take care of loyalty, and loyalty ties into customer service. So, brand and loyalty combined with benefits to the consumer using your brand on a regular basis are going to continue to be something that is growing. Ensure that you’ve got one of the better brands amid the competition. Take care of the loyalty side for your consumer, and I think your business will continue to grow.”