The car rental industry understands that the future is a streamlined, on-demand experience offering access to vehicles where consumers need them.   -  Photo via  Depositphotos .

The car rental industry understands that the future is a streamlined, on-demand experience offering access to vehicles where consumers need them. 

Photo via Depositphotos

After steady improvements coming out of the Great Recession, this could’ve been the year that car rental revenues in the U.S. flattened out. With all the talk of disruption in transportation and continued encroachment of Uber and Lyft, the arrival of driverless taxi services, and competition from automakers as service providers, this could’ve been that year — the one where market watchers say the sky is falling. 

But that wasn’t the case. In 2018 the U.S. car rental market hit a new revenue record, passing $30 billion in revenues for the first time. Overall revenue grew $1.38 billion from 2017, an incline last matched in the 2013 to 2014 period. Not only that, the industry achieved this growth on a smaller fleet size, which produced revenue per unit, per month of $1,131, another all-time record. 

Lest we forget the pre-recession era of over-fleeting, when rental was the dumping ground for unsold base models with rollup windows. It wasn’t that long ago, yet we’ve come a long way. 

The car rental industry is a lot smarter these days. In collaboration with automakers, the industry is honing fleeting and de-fleeting to control flow into wholesale lanes and protect residual values. Managing utilization has become a science. Smart fleeting, big data crunching, and the advent of artificial intelligence is lifting pricing. 

In the near term, volumes and pricing look good. But there are headwinds, specifically higher interest rates and rising depreciation, while corporate pricing is a seemingly perennial challenge. 

Sure, some will always say the sky is falling. Have you heard the saying, the rate of change today is the slowest we will ever experience? That’s a scary proposition if you’re moving millions of dollars of metal on four wheels each year. 

Yes, transportation is changing. For car rental to take part in this change, there are a few items on the industry’s “to-do list:” 

  • Create an app-based rental experience that is universal, relegating the rental counter to a pit stop only if needed.  
  • Migrate the majority of reservations made through car rentals’ own branded channels, and use third parties such as brokers and OTA’s only as needed.
  • Leave the antiquated ancillary sales methods behind and cultivate new products based on customer data, marketing partnerships, and location. 
  • Serve the gig economies in a way that makes financial sense for car rental companies. This market is growing exponentially in the face of personal car ownership is eroding. Those drivers need cars.
  • Join the Mobility as a Service (MaaS) continuum. When travelers pull out their phones to access a single app with a myriad of travel options, car rental needs to be one.  
  • Partner with autonomous tech players — not just as managers of autonomous fleets, but also as service providers.

The question, then: Is the car rental industry up to the challenge? In the past year, we’ve seen many positive signs.

In Europe, where MaaS solutions are further along, Europcar bought a scooter-sharing startup and is partnering with its car service division, Brunel, to offer last-mile ride-hailing in conjunction with car rental. 

Sixt is consolidating its divisions to deliver a seamless mobility product. 

Hertz is using biometrics and facial recognition to get customers on the road faster. Enterprise Holding’s partnership with General Motors to connect 100,000 vehicles, along with Avis’s plan to connect its entire fleet by 2020, are major steps forward. 

You may have heard another saying recently: Those who are the most adaptive to change stand the greatest chance of survival. 

The car rental industry understands that the future is a streamlined, on-demand experience offering access to vehicles where consumers need them. While this to-do list won’t be completed any time soon, these developments show progress to that end.

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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