Top 3 Issues Facing The Car Rental Industry

Issues Facing Car Rentals

Ride-sharing, millennials and cyber security top this year’s list

You’d be hard-pressed to find an industry or social environment that’s immune from the old saying “The only constant is change.” In particular, the car rental sector has been facing a great deal of perpetual alterations that it’s going to take more than a durable vehicular fleet to weather the storms it faces. Imagination, ingenuity and a great deal of creativity will be critical to meet the shifting conditions of the industry as it faces what we’ve narrowed down to three issues and challenges that await.

Competition from ride-sharing

Ride-sharing companies like Lyft, Turo and Uber have been around for at least a decade, but it’s only within the last year that the car rental industry’s biggest competition posed as a legitimate threat. According to Fortune, more than half of car rental customers in the U.S. since 2017 have stopped using the service entirely and have switched over to ride-sharing.

Still, that hasn’t had enough of an impact on the financials statements of the likes of Enterprise, Avis and Hertz, which still recorded record profits in 2018, but there’s no doubt that they’re feeling the heat. Some of the more aggressive companies are lobbying state legislatures to examine laws affecting car rentals, stating that current statutes leave ride-sharing companies off the hook when it comes to taxation and regulation. It’s an issue that has so far befuddled lawmakers in at least 20 states so far.

Encouraged by the dismal debuts of Lyft and Uber on the stock market, car rentals plan to use technology in a big way to reduce costs, increase efficiency and bolster customer service and it’s in the latter category that ride-sharing firms are failing to deliver.

All the major car rental players are particularly boosting customer options via their apps, offering such incentives as subscription fees and programs, diversified payment arrangements, and adding biometric features to enhance security and convenience. Connective technology and artificial intelligence that will allow the office and its cars to digitally communicate with each other is also a high priority.

Meanwhile, several companies are looking at how their infrastructure can diversify to stay ahead of the ride-sharing pack, or in some cases, work with them. Case in point is Hertz, which is looking at a more outreach-oriented perspective to the other side by offering rental deals to Uber and Lyft drivers.

Reluctant millennials

renting a car

Technology would normally be a pressing issue among the car-sharing industry, as it was cited as a major topic to be tacked at the International Car Rental Show in Las Vegas last April. But the notion of adding the latest innovations, including the gradual transition to green-powered vehicles and autonomous fleets turned out to be more of a means than an end.

What faces car rentals is a precarious future in how to deal with subsequent generations, especially millennials who certainly have a different perspective on the economy and the world at large. One report cited that one in four millennials don’t even have a driver’s license, while many of those who own a license don’t even own a car.

Admittedly, it hasn’t been a demographic that’s been taken seriously until now, given that most millennials don’t even own a car for reasons that run the gamut from economic shortcomings and trust in public transit to environmental concerns and opting for ride-sharing services. And it’s that final motive that’s got the industry gearing up to woo that age group over. More electric vehicles and a futuristic autonomous fleet could go a long way towards convincing millennials that car rentals are the way to go, since Gen-Z types, wired on the Internet since birth, do find high-tech options impressive. And for a generation that posts selfies galore on Instagram, a greater social media presence on behalf of car rentals could make their businesses more relatable. If car rentals are to maintain any edge over the ride-sharing set, innovation is the best card in the deck to play.


Besides technology, another concern at the ICRS convention was security, especially in the wake of a number of terrorist incidents in Europe and North America that involved rented vehicles. To that end, panelists were on hand to help staff identify clients who could be terrorists using a vehicle to reach their rather nefarious goals.

Meanwhile, car rentals are taking a look at how their own security measures protect their fleets, even examining the security features that come with cars they add to their vehicular arsenal. A theft earlier in Canada this year of a sedan made by Tesla, which stakes part of its reputation on security, was a severe test of those faculties. A fraudulent credit card transaction would have rendered that Tesla rental as good as gone had it not been for the GPS features that allowed authorities to finally trace the vehicle’s location.

But the biggest picture that’s even more worrisome comes by way of the White House that released a paper on cyber attacks in 2018, estimating that such malicious acts could cost the U.S. economy anywhere between $57 to $109 billion in lost business. And given that the perpetrators don’t seem to discriminate between profit-making organizations when they do have a business in its sights, there’s no reason to believe that players in the car rental industry are exempt.

Theft of consumer information, especially credit card data, is a huge concern in itself. But more hazardous consequences could surface if cyber criminals are able to hack into car rental software to render vehicles inoperable. And in the case of autonomous vehicles, the question remains whether a cyber attack could turn one of those cars into a motorized weapon utilized in the same way terrorists wreaked havoc on pedestrians while behind the wheel of a rental.

That unpleasant anecdote underscores one of the challenges, issues and even fears that face the car rental industry in the near future.

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