The future of ridesharing looks bright – but what does that mean for rental car companies? With more and more travelers using apps to hail rides from services like Lyft and Uber, car rentals may be falling by the wayside. For many, it’s easier than ever to call a car when needed, and often cheaper, too.
That’s why many rental car companies are upping their game to compete. In addition to focusing on strong customer service, many car rental companies are taking a page from their ridesharing competitors, offering customers the option to use mobile apps and other technology to make the rental process easier. Still others are playing to their strengths, using their already-existing infrastructure to meet the needs of ridesharing companies, who still need to maintain and repair their cars.
The Threat to Traditional Car Rentals
Rental car company stock prices have been volatile recently, falling 33 percent in 2018 alone as ridesharing gains market share. But that doesn’t mean rental cars don’t remain a real, viable choice for travelers in need of transportation. Almost 10 million consumers still use car rentals exclusively, eschewing ridesharing services altogether.
But, a nearly equal number of customers use ridesharing services exclusively. In 2017 and 2018, 63 percent of consumers who have used rental cars in the past reduced their spending on this means of travel transportation, resulting in a loss of nearly $3.2 billion to the rental car industry. Fifty-six percent of previous car-rental customers stopped renting cars altogether, instead taking their transportation needs to the rapidly growing rideshare industry. And, while ridesharing transactions make up just two percent of all travel spending (along with car rentals, airfare, cruise lines, hotels, and other travel services), they account for 30 percent of all travel-related transactions.
It’s not hard to see why many consumers prefer to call Ubers or Lyfts every time they need to get somewhere while traveling. It’s easy to pull up an app on your phone and have a car arrive to your location, whether you’re waiting in your hotel room or standing on the street. The low cost of ridesharing services makes this option more affordable for many travelers – and even when it isn’t, shelling out a little here and a little there feels like less of a hit to the pocketbook than paying for a week’s car rental all at once.
What Car Rental Firms Are Doing to Compete
Of course, car rental companies aren’t going quietly. They’re responding with significant improvements to their customer service. Many are introducing new car rental apps and other software that makes it easier for customers to rent, return, and pay for their cars. Many car rental companies are actually experiencing record highs when it comes to customer satisfaction, because they’re streamlining the reservations process, offering better cars, and lowering costs and fees for customers.
Today’s rental car companies are taking a page from ridesharing services and giving customers the option to use an app to reserve their cars, get information, and check in – a move that greatly increases customer satisfaction. Many, facing declining demand, are right-sizing their fleets and emphasizing customer service and marketing. They’re emphasizing more positive staff interactions and providing nicer cars.
Furthermore, many rental car companies realize that simply renting cars isn’t their only source of revenue. Rideshare companies like Waymo are anticipating the surge in market share that will accompany the widespread adoption of driverless taxis, but these cars, driverless though they may be, will still require maintenance. However, the companies building these driverless fleets don’t yet have the infrastructure they need to maintain and repair their autonomous vehicles. Guess who does? Rental car companies.
That’s why firms like Avis and Hertz are signing contracts to service autonomous fleets with companies like Waymo and Apple. These rental car firms have the infrastructure, staff, and experience to maintain large fleets of vehicles, and such partnerships allow ridesharing firms to better tackle the logistics of expanding their driverless fleets. They also allow the car rental industry to gain insights into autonomous technology, as it positions itself to become an early adopter of this new tech.
The future of rental cars appears uncertain, at least when compared to that of ridesharing services. But rental car firms still have a large market share, and they’re ready to change with the times. For those who need or prefer a car rental, these services won’t be going anywhere anytime soon.