The 2016 Auto Rental Summit, convened in Orlando this week, produced a trunkful of information, inspiration, motivation, and associations. For car rental operators, here are five trend lines learned at the event to put on your business to-do lists.  

-    Shift your model mix to meet consumer trends.

We broke the record for vehicles sold in the U.S. last year, but there are signs that we may not top that this year, said Anil Goyal of Black Book. And yet, production capacity is still geared toward a growth pattern. New car incentive levels have been trending upward since 2013 and, to move the metal, will continue to stay high. On the back end, supply is increasing, owed mostly to a still-increasing off-lease supply. (Off-rental supply is steady, a welcome sign that rental fleets aren’t out of whack.) Nonetheless, these factors don’t bode well for residual values — which makes fleet planning all the more critical today.

The key is in the segment shifts. It’s no secret that low fuel prices have dried up small car demand. Consumers have migrated to CUVs/SUVs, which have a myriad of sub-segments today and more resemble cars than the traditional body-on-frame SUV of yore. Sales trends show that CUVs/SUVs will eclipse cars in 2016. I’ll let that sink in for a moment.

This migration also includes rental’s largest traditional segment, midsize cars. “This is really a lifestyle shift,” said Michael DeLorenzo of International Franchise Systems in his presentation. “The functionality of a crossover meets the needs of today’s consumer.”

Rental companies are adjusting by buying more crossovers, but most car rental websites are lagging in how this shift is presented to renters, presenting them after scrolling through the traditionally popular segments. DeLorenzo’s Nextcar has adjusted by presenting them on the web page concurrent with the various car sizes.

Full-size pickups have recently led most segments in terms of value retention. They’ve always offered utility, but would a rental consumer actually go for a Ford F-150 pickup truck for suburban errand runs? We took a site visit to the ACE Rent A Car Orlando location serving the airport, and seeing a few F-150s sitting on the lot, owners Gary Lewis and Patrick Lewis affirmed that yes, they’re hot to rent and outperform in the auction lanes.

-    Engage your workforce now.

The great majority of workers today are disengaged from their companies’ goals. In fact, a good percentage of them are actively disengaged, even higher for hourly service employees.

Now consider the largest generation in today’s workforce, millennials, who are motivated by different factors than previous generations, said Geoffrey Toffetti of Frontline Performance Group in his keynote address. Millennials need to understand and believe in your “bigger purpose,” and how they fit into your mission. Your frontline counter agents can make or break a vacation. Are they up to the task of fulfilling this very important need of consumers?

The good news is that this engagement is within your direct control. Simply acknowledging an employee can increase his or her productivity by 50%. Employees are 30% less likely to change to a new job that offers more money if they feel valued. If you can engage them, you can keep them — and outperform your competitors.

-    Prepare for higher labor costs before they hit.

Five states have ballot initiatives this year to raise the minimum wage, while the federal minimum wage will be raised incrementally over the next few years. This may not affect rental companies as much as the new exemptions for overtime under the Fair Labor Standards Act (FLSA). Taking effect Dec. 1, employees earning less than $47,476 annually will automatically qualify for overtime pay for working more than 40 hours a week. This is twice the previous overtime pay threshold, which had remained unchanged for more than a decade.

You’re going to have to audit your workforce, said employment lawyer Rick Alaniz in his presentation, which means analyzing your employees’ duties to see if they meet the overtime exemption rule. You’ll also need to better define when overtime is really necessary, and understand how you can adjust your payroll to mitigate cost increases.

-    Investigate third-party platforms to rent your cars.

Broker sites such as, CarTrawler, Wisecars, and Booking Group (to name a few) are growing, comprising $4 billion of the car rental revenue pie worldwide today. More broker business is prepaid, so no-show rates are low, and their fee structure is much lower than GDS and OTA fees. Broker sites are specifically partnering with franchise locations and independents.

Not brokers in the traditional sense, app-based technology platforms such as Turo, Hyrecar, and Skurt spoke and exhibited at Auto Rental Summit. Each of these platforms is looking to grow by placing car rental inventory on their websites to rent to consumers and Uber and Lyft drivers.

-    Protect your data.

Large scale data theft is a now weekly news headline. And yet, securing PII (personally identifiable information) has not been a focus of many car rental entrepreneurs.

In his presentation, Shawn Concannon of TSD asked operators how many put PII data on car rental contracts, and how many leave printed rental agreements in a wire basket along with 30 others? “That’s a whole lot of personal information that could be grabbed in an instant,” he said.

This exemplified today’s problem: When Concannon asked who had been a victim of employee theft, quite a few hands went up. When asked how many had implemented a company security policy, only three raised their hands.

In this digital age, why do we meet at events such as Auto Rental Summit? Because you can still accomplish three times as much business, gain three times the amount of information, and make three times the number of new contacts than you can over email, telephone, or even video conferencing — in a much quicker timeframe. Face-to-face interaction breaks down barriers to enable connections in ways those mediums never will.


Originally posted on Business Fleet

About the author
Chris Brown

Chris Brown

Associate Publisher

As associate publisher of Automotive Fleet, Auto Rental News, and Fleet Forward, Chris Brown covers all aspects of fleets, transportation, and mobility.

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