Auto Focus

The Death of Car Rental?

Of course, I stood up in the ballroom of 200 and refuted the notion. But then I got thinking.

October 23, 2013

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It was during the “Carsharing and Personal Vehicle Sharing” panel at the recent Shared Use Mobility Summit in San Francisco. It was in response to a comment from the audience regarding a lawsuit in Germany in which a car rental association is suing a peer-to-peer car sharing operation. “When Goliath goes after David, you know they [the car rental companies] are scared,” the guy concluded. The next person got up and asked, “Is this the death of car rental?”

“Blasphemy,” I thought from my chair, as I readied my response.

Mind you, no one on the panel — representatives from RelayRides, Enterprise CarShare, car2go, and AutoShare — believes that traditional car rental is dying, and they responded as such. But then, here we were at a conference designed to bring new transportation business models together to see what will stick. It’s easy to get myopic in that environment.

And from the other side, as a torchbearer of a traditional business model, it would have been easy for me to feel alienated in a room of proponents of a car-free lifestyle. If we can call the total market for car sharing (including peer-to-peer) a $300 million a year business in America today, compared to a $24 billion a year business for traditional car rental, it’s also easy to be dismissive, especially if you think they don’t like you.

But when you think about it, blasphemy has no place in a business discussion. There are no sacred cows. All business models must be examined continually, no matter how close you are to them.

The car sharing industry and these new so-called disruptive business models have a few things going for them. They are active in the discussion to figure out the new world of transportation — mobility management — in which the mission fits the mode of transportation and one day a single smartcard will offer access to all forms.

They have the technology to access a car on a street corner with a smartphone. They can crunch Big Data using their membership-based, geolocation-based systems to understand their customers.

They have the ear of the millenials, those 20-something tech-savvy multi-taskers who would rather text than drive and are sensitive to the environment. They still have the ear of local governments that are willing to give them public parking spaces for the greater good.

But then again, “they” is “us.” The major car rental companies and auto manufacturers are already there.

Avis owns Zipcar. Enterprise Holdings has bought and consolidated smaller car sharing networks under its Enterprise CarShare mantle. Hertz is flipping the switch for 24/7 “self-serve mobility” rentals across the world. DriveNow is owned by BMW; car2go is owned by Daimler. Smaller companies are dipping their toes in the water too, as AllCar Rent a Car in New York has opened Carpingo, a car sharing division.

Lest we forget that the car rental industry itself was born from collaboration with other modes of transportation. In the ‘40’s a group of railroads formed a company that put car rental franchises along railroad stops and allowed travelers to rent a car when they bought their rail ticket. Warren Avis built a company around the idea that air passengers would need cars after their plane landed. Jack Taylor understood that car repair customers would need a substitute vehicle and that the public would sometimes want an extra set of wheels within their neighborhoods.

In my response to the question regarding the death of car rental, I said that the major car rental companies have been testing and implementing systems to decentralize and automate the rental process. They’re using technology to offer vehicles by the minute, week, month or more, where their customers are located. The industry is evolving, and has no choice but to evolve, to meet the needs of its customers.

How fast is this all happening? Well, that’s another debate. But if you’re not on board yet, you need to at least be aware of this transformation, and to understand that the car rental industry is part of the solution to today’s mobility. Come join the conversation.

 

 

Comments

  1. 1. Julian Espiritu [ October 23, 2013 @ 11:31AM ]

    Chris you are on point with your comment. At the end of the day it's all about renting an asset and taking advantage of the advancement in technology, not to mention changes in the market space. But that another story.

  2. 2. Alan Woodland [ October 31, 2013 @ 12:44PM ]

    Emerging technology allows the consumers to change their relationship with the automobile. These changes aren't likely to cause the death of the industry as we know it, but it certainly creates opportunities for car rental companies to consider how new carsharing models can help them provide a better service that meets the needs to today's consumer.

  3. 3. rehvivahetus [ November 22, 2013 @ 01:58AM ]

    I think, car rentals should try to move along with those changes and make adopted solutions that still fit for people. To say this is the end of rental is way too premature.
    from: http://www.renneks.ee/

  4. 4. rehvivahetus [ November 22, 2013 @ 01:58AM ]

    I think, car rentals should try to move along with those changes and make adopted solutions that still fit for people. To say this is the end of rental is way too premature.
    from: http://www.renneks.ee/

  5. 5. Robert Smith [ November 25, 2013 @ 03:48PM ]

    If you want to rent a car for a low price, you should visit: http://www.hotellookout.net/
    HotelLookout.net - best prices for car rentals, hotels and plane tickets.

  6. 6. Jacob [ December 03, 2013 @ 02:19AM ]

    Car Sharing might be taking off, but still car rentals are also equally booming. car rental portals like travelauto allows customers to interact directly with the car hire suppliers, this itself shows that car rentals are coming closer to customers

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Author Bio

Chris Brown

Executive Editor

Chris Brown is the executive editor of Business Fleet Magazine and Auto Rental News for Bobit Business Media. Through these publications, online newsletters, trade events and associations, Chris covers all aspects of the fleet world, including fleet management, manufacturer fleet activities, the fleet leasing industry, vehicle remarketing, rental industry news, car rental taxation and legislation as well as automotive environmental initiatives and trends.

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