Connectivity Helps Avis Bottom Line
Second-quarter results report cost savings from connectivity car rental technology
As the A-Team’s leader Hannibal Smith would say, “I love it when a good plan comes together.” Avis Budget Group’s technological strategy would be testament to that colloquialism albeit with materials far more sophisticated than what the fabled soldiers of fortune would deal with.
It turns out that the connectivity approach unveiled earlier this year by Avis at the International Car Rental Show is one big reason why the company is further in the black as evidenced by second-quarter financial statements released earlier in August.
Avis Budget Group’s second quarter conference call outlined how the company’s connected car initiatives are beginning to bear fruit right now. The company reported revenues for that period stood at $2.3 billion, up by two percent over what was taken in during that same time frame in 2018. Even with a cloud of uncertainty over the global economy and a car rental saturation with players that include ride-sharing upstarts, any increase is worth an extended round of applause.
However, that’s not where the real good news can be found in the financial statements reviewed. Drilling down beyond the bottom line, overall vehicle expenses were down by two percent. In particular, operating expenses were down a fraction of a percent. Pitted against what it cost to invest in and implement the technology connecting some 165,000 vehicles the past year, costs were still lower than in the second quarter of last year. That will likely prompt Avis to continue pursuing its goal of getting 200,000 vehicles wired into the company’s high-tech infrastructure by the end of the year, as well as getting the rest of the fleet hooked up by 2020.
As pointed out by Auto Rental News, the most identifiable area that improved efficiency and lowered costs was in fuel mileage, which Avis said amounted to more than a dollar’s worth of fuel savings for each vehicle during the period. Connectivity was able to use data to track mileage and fuel usage and with access to more accurate information. It was also able to pin down the level of the car’s engine performance and tighten maintenance schedules. The end result was gaining the ability to gauge the performance of a well-maintained car, which also increases its resale value once the car reaches its rental expiry date.
In short, and at least for now, connected car rental software is showing a win-win scenario for both the company and its customers. Rental firms can realize greater efficiencies by optimizing the performance level of its fleet and those realized cost reductions can be passed on to the customer, who’ll benefit from getting a greater bang for their almighty bucks.