Subscriptions Could Help Car Rentals In More Ways Than One
Option has potential greater than being another company revenue stream
As car rental subscriptions continue to be the idea of the moment in helping the industry adjust to the ever-changing economic landscape, one executive believes the notion might help companies in a number of ways.
Vince Zappa, president of automotive software firm Clutch Technologies, believes that subscriptions might eventually be the most popular way that car rentals would do business with customers.
“I actually think that loaner car programs, properly evolved, are really the mobility fleets for these dealers in the future,” said Zappa to Auto Remarketing.
So far, only Enterprise and Hertz have announced subscription packages, both of which are still in the testing phase.
One way subscriptions could help is in further utilizing fleet capacity, especially if one company office has anywhere between 50-100 rental cars in the lot. The logic goes, according the John Phelps, Clutch’s vice president of strategy and growth, is that smaller models tend to be booked during the week for business use, while larger vehicles tend to go on the weekends to families on vacations. If one type of model is primarily rented out at any point during the week, a different model remains on the lot. Monthly subscriptions would likely ensure all models are rented out more.
“So, you have this unused capacity that’s disappearing, but more importantly is you just simply have the weekends, where [loaner] cars then sit idle,” Phelps said. “And so, I think that’s where you start to see power of these things coming together.”
Clutch claims to have received feedback on how subscriptions would help fleet management. One method that’s being bandied about concerns the way company staff would ensure customers get a particular model for a short period of time, while hanging onto a car they believe would be better for a subscriber. Providing a customer with a vehicle won’t be so random anymore as subscription fleets would turn into, as Phelps calls it, “a profit center.”
Another way that Clutch executives feel that subscriptions would benefit rental car companies is using them to boost additional test drives. If a customer wants to eventually buy a car, but is unsure of what model to get, a monthly subscription would enable that customer to swap out vehicles during that time until the ideal model is decided upon. Enterprise’s subscription program allows a customer to swap up to four times a month, while the Hertz program is limited to only two swaps.
“There’s two things we want to do,” added Zappa. “One is to remove inefficiency in the dealership related to the test drive process. And number two, we think it just offers a way for the dealer to close business better.”