As the economy starts to open, the public needs cars to get around. That’s a good thing for car rental companies because they have plenty of cars to rent.
Utilization, however, is still far from normal. To put renters in cars, operators have been relaxing the rules by allowing cash rentals, removing mileage restrictions, and generally giving into customer demands they wouldn’t normally.
While utilization is bound to improve, Sean Cox, a U-Save Car and Truck Rental franchisee serving Colorado Springs, Colo. and Charlotte, N.C., believes straying too far from the established model will come back to bite the operator.
During this pandemic, Cox’s adjustments to his plans are based on these principles:
Don’t Give Cars Away
Rates need to be competitive. If I’m battling for every customer, I’m probably going to start seeing my loss rates increase, either through damaged cars or non-paying customers.
I’ve been searching out cars that are similar to what we have to offer and I’m pricing our vehicles so that they are a better price than the exact comparable on another company’s site. But I’m not so low to lead the pack. Customers are becoming more “model savvy.” For the most part, they’re looking for a particular model, either because they are more familiar with that model or because they’ve got a specific need for it.
Stick to What You Know
Look, at my locations I’ve been dealing with renters in a lower economic class for nearly 30 years. We know what they want. We know what they’ll pay, and how. We know which products will bring us the best return with the best reliability. Don’t start trying to change this model because you’re starting to feel the pressure to make tires roll. There truly is safety in what you know best.
Stop Making “Deals”
It feels like every time we make some “special” consideration we end up on the losing end of my least favorite auto rental game show “Deal, No Deal — or You’re Screwed.” Fully 80% of these considerations — giving them more miles, adjusting rates for longer periods, upgrading for pennies, modifying deposit requirements — come back to bite us in the end. Stop making deals. Margins are already slim enough. Once we add in the huge depreciation our fleets are going to see in the next 12 to how many months, they’re just going to get skinnier.
Look for new business — but be smart about it.