Is the Car Rental Industry Steadying Up Despite a Market Disruption?
Much has changed in the car rental industry since the Covid-19 hit the marketplace. During the pre-covid time, the world witnessed a rapid change in the transportation sector, and new ideas like shared trips and mass transit were brewing over the realm of affordable and convenient commuting. But as the world grappled with the Covid pandemic, many of these ideas succumbed and the transportation business, especially the car rental business, saw a setback. Those who invested in car rental technology managed proactively by making the right decisions, reaching the customers, and delivering services without any hitch.
As per Statista, the car rental industry worldwide is expected to grow by $110,894 million by 2025. The car rental business depicts huge market potential, but an ongoing pandemic crisis can influence the customer’s mobility preferences, which could eventually decide how the car rental business will perform in the coming days. In the middle of all the speculations over covid complete recovery, the question for the car rental industry lies- will the car rental industry ever perform as it did before the pandemic? The answer lies in one element – Digitalization; investing in the right technology can make you withstand any unforeseen circumstances.
Read on to discover the car rental industry business trends and whether they will rise or fall in the coming days.
A decade ago, when the global economy was strangled due to recession, the car rental industry exhibited a disciplined approach to recover, and they did pretty well. Covid 19 is an entirely different scenario, and none of their previous strategies worked for the industry. Car rental operators are observing faster recovery than their expectations, making quick adjustments in their business strategies to meet the customer demand.
Many big players in the car rental business are partnering to fill the void in rendering their services to customers. Hertz Rentals reportedly signed a partnership agreement with Tesla Motors back in November 2021 to supply 100,000 Model 3S to Uber drivers. Incidentally, Hertz went bankrupt in May 2020 due to lockdown, but walking against the wind, somehow it is back in business with new strategies and survival tactics In another deal, GoAir partnered with Eco Europcar in April 2021 to launch rental services across 100 cities in India. Humax too signed a contract in Feb 2021 with WTC Auto Rent in the Middle East to enhance their technology for round-trip and free-floating services. All these contracts indicate that car rental operators are scaling up their businesses worldwide and are strategizing to reach their customers in a higher volume than before.
Advancement in technology could be another key factor in propelling the car rental business. The car rental owners are observing an increasing trend of mobile apps and advanced technologies such as NFC (Near Field Communication) and car rental software. These technologies enable business owners to reach more customers and deliver a better customer experience. With the help of car rental software, car rental operators can engage customers proactively through loyalty programs and discount offers. Besides that, it helps car owners to get a better view of their inventories and avoid chaos while arranging cars for the customers.
Covid outbreak has not just impacted the travelers but even the manufacturers producing microchips for cars. Without these chips, cars are dysfunctional, leading to shortages in rental cars. Airports have been the key source of income for the rental car business. It has eventually helped the car-rental business to get back on track.
Defining a differentiated business strategy is more crucial for car rental owners to survive the Covid pandemic and car rental companies such as Miles and Avis have done this smartly. Miles, a German based car-sharing company, has extended their services from cities to suburban areas to encourage locals to take car-rides instead of public transport. Whereas Avis, the American car rental company does not charge any cancellation fee if customers cancel their ride and allow them to claim their refund without any hassle. Besides such strategies, car rental companies should also be ready to offer gift cards and vouchers so customers can give them to their friends and families. Customers can also earn rewards and discounts on airlines or hotels that have signed a contract with car rental companies. These are some small steps but can make a huge difference in retaining customers and sustaining a covid crisis.
In the coming days, the car rental business can see the government’s active role in accelerating its business growth. High emission of carbon dioxide and degrading air quality is a major issue faced by developed and under-developing countries. Zero-carbon emission and promoting car rental services to reduce the number of private vehicles on the road could be one of the main government agendas to curb pollution. They can even extend their full support to car rental services who could include electric cars in their rental fleets. It would help them reduce pollution and make car rental services cheaper for customers.
The pandemic has been acting tough on the car rental business, but car rental owners have managed to resume their services despite all the challenges. The market is steadying up despite disruptions. Those in the car rental business are making every effort to make customers safe and bring business back to track. However, it is pretty difficult to gauge how the car rental market would behave as the wrath of covid continues. But, car rental owners can reduce its impact by becoming more organized in their approach and investing in the right technologies that can help both the customers and the car rental business owners.