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technology changing rental car industry

How technology is driving change in the car rental industry

2 Sep 2019
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The car rental sector has undergone phenomenal transformation in the last decade. Shifts in consumer behaviour coupled with new technologies and the smartphone revolution have seen the rise of new subsets in the ground transportation sector. Ridehailing, ridesharing and carpooling businesses have joined car rental, rail and bus in this sector digital first, forcing existing players to innovate.

Today’s consumers want fast and frictionless solutions to satisfy their travel needs. As the new entrants in ground transportation are innovating intensely to capture a bigger share of this market, failure to adapt by the car rental sector could put a dent in this market. So how are car rental companies embracing technological advances to stay relevant and can the benefits of such technology touch both operational processes and customer experience?

Current issues with car rental

For most travellers, renting a car is a cost effective and convenient method of travel, with many businesses offering a variety of models at discounted rates. However, for a few, renting a car can also be a cumbersome experience.

Waiting in line for an hour after a long flight, painstakingly selecting options from a checklist at the rental desk and finally realising the ‘roomy’ economy car waiting at the collection point was not what was reserved for your family of 6. Price inclusivity can be another issue with some consumers giving the thumbs down to lack of transparency and the added pressure to buy extras like damage waiver insurance.

The internet has revolutionised how consumers communicate and engage with brands as well as to each other across the globe. Car rental companies have to take note as online review platforms like Trustpilot not only publicise positive reviews but also bad customer experiences.

Businesses can’t afford to be complacent when it comes to serving the public demand for a more convenient rental experience.

After all, unhappy customers will seek alternatives for their vehicle requirements. It’s no longer about renting cars but providing a mobility solution to allow people control of their time and destination.

The rent a car industry is one which is intricately tied to the growth of the travel and tourism industry. So, as the digital revolution sweeps the hospitality sector, technology could also leave no stone unturned when it comes to car rental.

The industry is addressing the all too familiar pain points faced by business and leisure customers alike and it is keen to bring the car rental experience into the digital age.

rental car industry issues

The smartphone revolution

The smartphone has fundamentally reshaped the hospitality sector. Consumers are using apps to view and book holidays on the go and the car rental industry is realising that the future is mobile driven. In a blog post written by Lance Smith, the Avis sales executive commented;

‘As a company we believe that our future will be mobile driven. In many cases, apps are already the lens through which we experience the brands we deal with and in future our every business interaction will be driven through smartphone technology.’

More and more car rental companies are innovating to reinvent rental by putting customers at the centre and providing ways to make their rental experience better.

Modern mobile apps have the functionality to select a price point, make and model of car, extras like GPS, bike racks, car seats or mobile Wi-Fi, and then allow users to make their booking.

Historically, key management has been an issue for both rental operators and the consumer. Rental agreements have to be signed before a key is issued and car hire companies need to be sure the key is returned.

Keyless technology is now allowing customers to remotely gain access to their vehicles from their mobile devices and enable the ability to start the vehicle as well.

As an example of how the technology is evolving, consider the Avis Now functionality within the Avis app. It allows users to make and manage bookings, then skip the counter and go directly to the Avis Rent a Car lot, where they can locate their car using the app, then unlock it with their smartphone and drive off.

Connected car technology

Connected car technology and cars-as-a-service (CaaS) are the new buzzwords, synonymous with the shift to demand for more mobility and flexibility. The benefits to consumers are obvious and to operations, the positives can also be seen in terms of improvements in the back end.

Connected technology allows companies clear insight into how many cars they have, where they are and vehicle status. All of this facilitates vehicle recovery and asset management and in the future will minimise the likelihood of vehicle failures thanks to predictive analytics technology.

New business models are being created thanks to connected car technology. In today’s market, consumers typically collect a vehicle from an airport or a designated facility at limited off-airport locations. But with remote access technology, the potential for new partnerships between rental companies and hotels for instance is further extending the car rental footprint.

Ridesharing – If you can’t beat them, join them

Ridesharing giant, Uber was first founded in 2009, and has grown in popularity over the last decade. It has revolutionised the way we move and together with Zipcar and Lyft in particular, is shaking up the US taxi and car rental industries in the reimbursed ground transportation segment. It is easy to see why. These platforms can be used via smartphone apps and cars can be booked in a few clicks for door to door transport with visibility into vehicle location and arrival time.

Many consumers and business travellers are turning to Uber and Zipcar for simplicity and convenience when previously they would have booked a car rental or taxi. But is the car rental sector in danger of being muscled out of this market by the ridesharing heavyweights? Not according to Sixt’s chief administration officer Alexander Sixt as reported in the WTM Insights:

‘Uber and Zipcar serve a completely different demand to Sixt. Our goal is to offer comprehensive and demand-oriented mobility. One example is our mobile app [sixt.com/getaride], where our customers can choose between Sixt Limousine, Mydriver for business transfers or the low-priced taxi alternative Sixt Rides’

Newcomers like Lyft and Uber have disrupted the auto industry’s business model by offering customers an alternative to vehicle ownership through smartphone-based ridehailing services.

As innovation continues to evolve in the car rental industry, firms such as Sixt are viewing themselves as platform and technology providers, looking to reduce the private ownership of passenger vehicles. For example, Sixt has expressed a desire to offer third-party vehicles including private cars, for rent on its own platform as it continues to innovate to deliver new mobility services.

Ridesharing

It’s all about the customer – seamless bookings and payments innovation

Search behaviour is now changing the way that car rental brands are being found and companies across the globe are trying to create a better experience for their customers. At the heart of this transformation is the ‘in-destination experience’.

The seamless integration of rent-a-car services into travel and tourism bookings means booking engines are creating a ‘travel experience’ to car rental bookers by offering highly targeted offers on tours , hotel rooms and more. This not only creates the travel experience but also incentivises a further purchase.

Providing the right payment solution which supports the right payment methods to meet the needs of both the customer and the business is another consideration for rent a car companies competing in the consumer and business rental markets.

Avis Car Rental became the first rent a car company to introduce t split payment functionality to its mobile app experience. This after a survey of travellers in the US revealed that 87 percent are likely to mix business and leisure in the same trip.

The new ‘Split My Bill’ functionality within the Avis Mobile App allows travellers the ability to split car rental payments between two different credit cards or forms of payment. Customers now have the option to split their payment by total bill amount and rental days. For business travellers, they no longer have to worry about the blurring of lines between leisure and corporate travel expenses.

Leisure travellers and business travellers also appreciate visibility into travel spend when abroad. Some business travellers may find opting to pay in their home currency for rental, via Dynamic Currency Conversion, a more effective and convenient way to track expenses and stay within budget as it means the exchange rate is calculated at the point of purchase.

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As well as offering transparency and choice to its customer in their home currency, car rental companies are also realising that offering multi-currency pricing and dynamic currency conversion generates a new source of revenue for their business from existing international transactions.

Self-driving vehicles

Imagine a car being able to navigate without human input. There is tremendous excitement at the emergence of driverless cars but for many countries the uncertainty remains around how to approach this potentially game-changing advancement.

This hasn’t stifled the enthusiasm from a number of rental companies like Avis and Hertz who are beginning to explore partnerships to support autonomous vehicle development in a bid to become early adopters of the technology.

Uber has been at the forefront of the introduction of autonomous vehicles and in September 2016 it launched its first self-driving vehicle in Pennsylvania.

There are still issues surrounding the technology however and the company was ordered to remove its semi-autonomous vehicles from Californian roads following traffic violations in December of the same year.

One thing is certain though, before totally autonomous vehicles can be introduced, numerous technological, regulatory and ethical issues need to be resolved by manufacturers and politicians.

To fit into the new on-demand lifestyle of consumers, car rental companies need to continue to invest in technology to provide personalised service and convenience. Customers are no longer just looking for good customer services and great rates. They want a service that is designed around them, when and where they need it. Only time will tell if the car rental industry can keep up with the technological changes brought about by Uber, Lyft and other ridesharing services. One can argue that car rental fills a space that ridesharing services can’t. Longer duration road trips, for example, can be served by car rental companies. This sense of freedom where one doesn’t have to order a ride influences many in the decision to rent a car. There is also the safety factor associated with ridesharing and car rental could also be a better option for the less tech- savvy customer. It is doubtful that the car rental industry will succumb to the new entrants but it will have to adapt to service the needs of an ever demanding customer.

Fexco offers innovative payment solutions which allow cardholders to pay in their own currency whilst creating a new revenue stream for car rental companies. Visit our Ground Transport page for more information about our solutions for the sector or contact Andrew McCarthy for more details: AMcCarthy@fexco.com

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