Top 5 Car Rental Industry Trends in 2020
At this time last year, the car rental industry was still wrapping its head around how to take advantages of new amenities brought about by new innovation, especially artificial intelligence. Technology was to be the main driver that would move the industry forward at a time when increased competition from ride-sharing and economic uncertainty muddied the financial waters.
Then came COVID-19 and with it, a government-sanctioned lockdown that crippled the travel industry and with it, the car rental sector. Expectations of a repeat year of record profits instantly vanished as conglomerates and independent companies alike scrambled to not only survive but strategize on how to stay competitive once the pandemic subsides. There was no getting around it; the presence of the coronavirus was the source of this year’s five biggest trends in the car rental industry.
1. Increasing possibilities for car rental software
On the technology side, the use of artificial intelligence and car connectivity to ensure more efficient and speedier service continued unabated, but anecdotes of that progress took a backseat to how users of car rental software programs could take advantage of features to better safeguard themselves from the pandemic.
While retailers started making noise over the prospects of using aps for “contactless transactions,” rent a car software was already ahead of the game. Bluebird paired up with Move Mee to provide more unmanned booking opportunities to maintain social distancing measures. Additional companies continued the development of remote booking options on upgraded interfaces, making it easier for customers to do business with a rental company.
And rental car software, from the platforms being used by the corporate sector to independents, continues to look for new ways to boost customer options and make booking easier and more convenient. Offering more consumer incentives from subscriptions to split payments, which were huge deals in 2019, may only be the tip of the iceberg when it comes to opportunities for easier engagement and more abundant customer choices.
On the business side, there will always be a need to improve real-time reports, manage fleets and receive the latest information on financial status. Improved car rental software, faster data retrieval and using cloud-based technology may provide the information a car rental company needs to strategize its way out of a pandemic situation into what will hopefully be greener pastures down the road.
2. Less competition in the market
The biggest casualty this year was Hertz, which filed for Chapter 11 protection in May, while Avis announced dramatic restructuring that involved massive layoffs and fleet reductions, including a massive drive to sell off a sizeable portion of its vehicle inventory. With much of the industry’s revenue stream dependent on airport travel, which dropped by more than 90 percent in the first half of 2020, almost everyone struggled, even industry leader Enterprise, which still managed to record second-quarter profits of $14.6 million.
It wasn’t all bad, however. The ride-sharing market, cited as a major threat early in 2019 was less of a factor this year, when most companies like Uber and Lyft found more economic potential in delivering food than passengers. It also didn’t help that those same companies were temporarily sidelined in California due to the introduction of state labor laws that declared drivers as employees. The ban has since been lifted, pending a proposition to be voted on in November.
3. More customer service focus on safety
In 2019, technology paved the way for improved customer service in terms of speedy delivery and increased consumer options. But with the pandemic, customer service took on a more hands-on approach, especially when it came to safety.
Companies ordered staff to undergo quarantine protocols in the case of any symptoms developed while on the job or elsewhere. And more forward-thinking car rental firms were quick to increase the intensity of its cleanliness and sanitization procedures, especially in fleet interiors.
Others not only followed those measures, but even upped the ante by providing that extra personal touch, such as offering free hand sanitizer and masks for those who booked.
4. Rates dropped globally
The laws of supply and demand still prevail even during a lockdown in the wake of a pandemic. And true to form, largely due to the cancellation of international flights upon which the rental car industry is heavily reliant, rates dropped considerably, as much as 18 percent in Florida.
However, the U.S. change in rates was nowhere near as dramatic as they were in their neighbor to the north. Canadian car rental firms dropped rates by as much as 48 percent. Much more severe was across the Atlantic in Sweden, where they plummeted by as much as 57 percent.
5. Fleet sales larger than normal
In a more perfect world, car rental companies routinely sell off its older cars, before vehicular depreciation eats away at the bottom line. But in a pandemic, more vulnerable competitors like Hertz and Avis were selling them off at much higher volumes than usual, making these transactions a larger revenue stream than ever.
While those sales provided a financial cushion of sorts for struggling players, customers reaped the benefits of getting a vehicle that was once part of a rental fleet, simply because they were far cheaper than what’s been rolling out of plants of late.