How Car Rental Giants Are Taking On Ride-sharing Rivals
Despite company sizes, car rentals find ways to boost revenue
At the beginning of the year, ride-sharing companies like Lyft and Uber were reportedly causing a significant dent in public transit with sights set on taking on the car rental industry. But the latter has fought back as indicated by record profits by Enterprise Holdings (which owns rent-a-car firms Alamo, Enterprise and National), with other players like Avis and Hertz showing healthy financial performance numbers the past half-year.
So, the big question is, how did they do it? In the case of Enterprise, it’s already an elephant among competitors, earning a staggering $24 billion annually and servicing 95 percent of the world, while grabbing more than a third of the airport market, arguably the biggest revenue stream for car rentals. And while the behemoth adjusted to the ride sharing with a few modifications, most notably the introduction of monthly subscriptions, the jury’s still out on the success of those ventures. That said, the company’s sprawling network of offices worldwide enabled them to take credit for being the most accessible car rental on the market, a big factor in its success.
Meanwhile, Avis and Hertz, who are relatively more vulnerable to ride-sharers simply because of their smaller company sizes, offered what worked for them to improve their revenues. Avis reported a two-percent rise in revenue to take in $2.3 more than at the end of June in 2018, while Hertz reveal the company earned $2.5 billion reflecting a five-percent increase over the same period.
“Our results were achieved through quality top-line growth, productivity improvements and effective fleet management,” said Hertz CEO Kathryn Marinello.
Despite that vague sound byte, it was in fleet management where Hertz really focused its attention. A deal with Amazon to deliver online orders certainly garnered greater returns on the company’s larger vehicles. But the company also struck gold when it reached an agreement to lease its vehicles to drivers working for ride-sharing companies. What’s significant, however, is that what’s being rented out aren’t the latest models rolling out of automaker factors, but older vehicles in their fleet nearing the end of their design lifetimes. That approach serves two positive results: first, they’re cheaper for ride-sharing drivers to rent, and second, they get additional revenue from cars that would otherwise be sold off.
Avis has also inked deals with ride-sharing companies to take advantage of what their rivals need in terms of mobility. “We only do weekly rentals, so we have an opportunity to review it at the end of every week,” said Avis CEO Larry De Shon. “So I think we put the right parameters around it to make sure that we are pleased with the results of it.”
Hertz also introduced a subscription program in June.
Avis has also been bullish on its technology, most notably bolstering the robust properties of its cellphone app to enable users greater flexibility in managing their accounts and taking advantage of new high-tech features, such as a customized rental interior and improved roadside assistance services. It also introduced a fee-splitting feature to enable customers to pay a portion of its bill via credit card, or debit, or other transaction options. All of these additions may soon be the norm when it comes to vehicle rental software.
While the two companies certainly can’t use their company sizes to take on Enterprise, they’ve both found niches by finding out a way to work with their ride-sharing competition and introducing new technology features.