Auto Rental News, January 2020

2 Fact Book 2020 AUTO RENTAL NEWS E D I T O R S C O R N E R CAR RENTAL 2019 SOLID FUNDAMENTALS BUT QUESTIONS AHEAD Exiting a year of record revenues the new year brings new challenges and pressures from market disruptors incumbent players new to the U S market and new mobility models F FOR THE U S CAR RENTAL INDUSTRY THIS YEAR TURNED out better than expected In 2019 U S car rental hit a new revenue record of 3187 billion a 53 increase over the year previous even as overall fleet size grew only 22 from the previous year This drove average revenue per unit per month to a new record of 1174 To what do we owe this good fortune A strong economy is certainly helping which is driving a positive travel outlook and creating a robust wholesale market to sell off fleet rental cars Lets also credit car rental companies Theyve been applying new connected car technologies data analytics revenue management techniques and remarketing diversification strategies to squeeze more juice from the orange Another fruit of this labor J D Power Associates Rental Car Satisfaction Study saw its highest average score ever Enjoy these solid fundamentals but not for long The new year brings new challenges and pressures from market disruptors incumbent players new to the U S market and new mobility models Here are the questions that need answers for 2020 and beyond The implications for the connected car are far reaching Yet were still a couple years away from realizing the benefits in full and there are issues to resolve How will rules regarding data access and control be written and when will they come to fruition When will telematics move from clunky aftermarket install to simply checking a box when ordering the car Connected cars promise to deliver an on demand app based rental experience The technology has been available for years so whats the hold up Will a catalyst or tipping point free customers from the rental counter Can the industry shift ancillary sales to an app based rental Avis Budget Group and Enterprise Holdings are undergoing senior level management changes Will new leadership bring fresh initiatives to the industry Europcar has finally entered the U S with its purchase of Fox Rent A Car Will this new combination shift existing market share Is there any room for growth for a new player in the most mature car rental market in the world Will Europcar bring any of its mobility initiatives stateside Lyft is now renting an owned fleet to the public in San Francisco Oakland and Los Angeles Lyft has built in customers and the capital to grow ancillary initiatives How will its diversification into fleet ownership affect car rental Will Lyft continue as a fleet owner and manager end up partnering with fleet suppliers or eventually exit these new services altogether In that vein Hertz and Avis have found a profitable formula to rent to Transportation Network Company TNC drivers How large can this business to business niche grow and will other car rental companies jump in The future of transportation might be shared and on demand Yet the traditional carsharing market has stalled Both Daimlers car2go now Share Now and GMs Maven went through major layoffs and service terminations in scores of North American markets Like the TNCs do automakers still have the appetite to provide services with an owned fleet The peer to peer P2P rental industry however is growing P2P operator Turo doubled growth over the past two years and now has 400000 vehicles available on its platform Rival Getaround bought Europe based Drivy to boost its international presence and now claims 5 million users worldwide But is the future of P2P built on sharing private consumer owned cars or a fleet In its third quarter conference call HyreCar which rents vehicles to TNC drivers reported a dramatic shift away from peer topeer rentals toward dealerships that already operate rental fleets The company added 130 commercial accounts and about 2000 cars as of early September In the long view will fleets fill the void to supply P2P platforms as vehicle ownership wanes The more immediate question When does profitability replace the cash injections from investors Answers to these questions wont come immediately but the industry has proven at least for now that it can meet these challenges BY CHRIS BROWN