After some challenging times the last few years, the car rental industry seems to be steering toward a recovery, with supply chain problems fading, inventory returning to historic normal numbers and business travelers once again making regular trips.
“The industry is on an incline,” says Adam Miller, director of corporate sales for Go Rentals. “We experienced rapid growth during the pandemic and then a continued sustainable growth ever since. It seems that the ‘new normal’ is shaping up to be normal.”
Globally, the travel industry continues to grow. Global players such as hotel chains, online travel agencies and tour operators are seeing signs of positive development, albeit at a slower pace of growth. Still, many are optimistic about the upcoming summer travel season as the overall global desire for travel remains high, which paints a positive picture on the car rental industry.
“The Number One positive of 2024 is that travel decision makers are taking a closer look at travel experience for employees and executives alike,” Miller says. “With bleisure travel on the rise, corporate travelers identify travel perks as an added benefit. Companies are recognizing this and are starting to loosen up on the travel cost constraints in an effort to attract the best talent.”
Don Moore, senior vice president of global business sales for Enterprise Mobility, notes the supply chain disruptions that previously existed have leveled out and Enterprise is regularly receiving new vehicles from its auto manufacturing partners.
“The greatest challenge for us, and many other industries, is rising costs,” he says. “Repair costs are at an all-time high. Not just cost of purchasing vehicles, but repairs, maintenance, and things like attracting and retaining the right talent.”
Misunderstanding Insurance
While rental cars are in a better situation than they have been in recent years, there remain challenges, perhaps the biggest with damage waiver problems and insurance. After all, repair costs have risen dramatically and car rental companies are looking at new metrics around the percentage of claims and how damages take cars out of inventory.
As the cost of repairs continues to climb, companies are looking for ways to mitigate the cost. Therefore, adding retained responsibility for programs that include damage waivers, or removing waivers altogether, are becoming more common in the industry.
“Outsourced claims teams are focused on recovery and may not have the tools to discern the nuanced difference between what should be covered and what shouldn’t,” Miller says. “Furthermore, outsourcing takes experience control away, leaving room for undesirable interaction. Go Rentals understands that a vehicle claim experience is potentially the most difficult in the entire rental car service interaction. For this reason, we have an in-house dedicated claim team who have received the same hospitality training as our guest services team.”
Some rental car providers have made insurance part of the negotiated rate, where the insurance covers everything with no deductible. In fact, Enterprise removed all deductibles outside the US. But that poses a problem for some who would rather rely on their own insurance.
Michael Silverman, founder and president of Silver Lining Insurance Agency, which works with car rental companies, notes he’s seen a rise in accidents with rental cars over the past few years due to the large increase in rental contracts.
“The damage waiver is frequently not purchased by people because they think their personal insurance covers it. Some do and some don’t,” he says. “It is imperative that one checks with their personal insurance coverage prior to renting a car. What is and what is not covered? There are differences from company to company and state to state.”
Of course, no one is forced to purchase insurance. Renters are inundated with pages of insurance legalese, and many do not bother to read what they are signing.
“We are always working to improve the rental experience and to provide our customers with more efficient and transparent vehicle handover processes in the event of a damage claim,” says Melanie Carr, vice president of sales for SIXT North America. “One measure that contributes to further optimize these processes is the continued installation rollout of so-called ‘car gates’ at selected locations and in collaboration with various providers.”
These gates digitally record and document the external condition of the vehicle as it enters and leaves the parking area, ensuring a high level of transparency on vehicle condition for both parties and speeding up the entire vehicle pick-up and return process for customers.
Moore notes that while the number of accidents has dropped, in part due to preventative technology in newer vehicles, costs for repairs continue to rise. And this increase in repair costs is outpacing the savings from decreased accidents.
“The new safety technology – which saves lives – has also increased the price of new vehicles,” he says. “OEMs are building fewer midsized cars and have transitioned to building more SUVs and other larger vehicles due to customer demand, all of which cost more.”
Notable News
Nevertheless, rental cars remain a significant part of most corporate travel programs, and rental companies are responding with new offerings and expanded services.
For example, in the United States, the world’s largest and most important car rental market, SIXT was able to open four new airport and 13 new off-airport branches in 2023 and thus far in 2024 has opened three new airport locations including Kansas City International Airport, Kona International Airport and Salt Lake City International Airport, as well as several off-airport locations in cities such as Los Angeles, Chicago, Washington DC, Portland, OR, and elsewhere.
“As a part of our implementation process for corporate customers, SIXT offers every business traveler the opportunity to join our SIXT loyalty program,” Carr says. “With a SIXT profile, a traveler will not only be eligible to benefit from our mobile check-in process in the US, but also to collect valuable rewards with one of over 45 airline partners and 25 hotel groups and loyalty program for each rental. Additionally, rewards can also be earned when a traveler books though a CTM or TMC, as long as the SIXT traveler’s ID is stored within the traveler profile reflected in the SIXT rental car booking.”
Go Rentals has just announced a recent nationwide expansion to include an additional 74 new locations.
“Beginning in 2024, Go Rentals is now offering nationwide corporate rate programs with options for the full spectrum of organizational size,” Miller says. “With this offering, travel managers have a nationwide service leading option for their executives with full management capability.”
The well-established Enterprise name has seen big changes as well, bringing the power of its various products together under the new corporate brand – Enterprise Mobility.
“Now, as we reaffirm our mobility ambition and look to partner with others to help shape the future of mobility, we are connecting the business’ full portfolio of offerings – car rental, fleet management, flexible vehicle hire, carsharing, vanpooling, car sales, truck rental, vehicle subscription, luxury rental, technology solutions and more—under a new corporate brand,” Moore says. “This marks the beginning of our next chapter and reinforces a commitment to deliver exceptional service for partners, customers and communities—innovating with intention to meet their ever-changing needs.”
Trending Tech
Technology is being used in the car rental industry as both an enabler to enhance the face-to-face service team members provide to customers, as well as to expedite customer service for frequent travelers and repeat customers who prefer to bypass the counter.
For instance, SIXT was the first car rental company to offer booking via a mobile app and since December of last year, customers have benefited from an enhanced digital booking process via the SIXT app and SIXT.com, both of which have been thoroughly modernized.
“In addition, vehicle pick-up and the entire process of starting a rental is becoming significantly faster for customers in 2024 thanks to the ongoing roll-out of mobile check-in at more and more SIXT branches,” Carr says. “With mobile check-in, customers can simply complete and check their driving license details in advance using the SIXT App, for example, and then select their preferred specific vehicle themselves shortly before the start of the rental.”
By combining modern technology, developing new tools and streamlining processes, Enterprise Mobility is optimizing customer experiences from the inside out.
“Technology has improved the efficiency of renting a vehicle,” Moore says. “Reservations can be made online on a mobile device or computer, and we have invested in technology that puts our employees where they need to be – with customers and not behind a counter.”
The company’s growing fleet of connected cars is one more way the company is investing in innovative technology that removes friction from rental transactions – giving customers more control and a more seamless experience.
“Connected vehicles can automate tasks, such as checking fuel levels and mileage, eliminating the need for a rental representative to get in the car, making the check-in and checkout processes more efficient and enabling less contact at pickup,” Moore says.
While sustainability and fuel efficiency remain high priorities for rental car providers, one big technology shift in the rental car market that has thus far failed to materialize is the misfire on electric cars. After having invested heavily in electric in 2023, Hertz announced earlier this year that it was selling nearly 20,000 electric vehicles, including Teslas, opting for more traditional gas-powered cars in its fleet. A main reason is the higher expenses related to collision and damage for EVs.
“We watched as rental car providers increased the size of their EV fleet,” Go Rental’s Miller says. “However, we anticipated that travelers would have an aversion to the unfamiliar. We have not had any challenges to increase our fleet to meet the demand.”
Navigating Change
Part of Go Rentals’ managed travel offering in 2024 is its availability on the global distribution system. With the increase of corporate travelers flying private, travel managers have requested that the company distribute its content through the GDS.
“Previously this was unnecessary as corporate flight departments were in a silo and operated independently from the travel department,” Miller says. “We always strive to meet our guests where they need us and so we are honoring their requests.”
In the months ahead, SIXT is planning to continue its robust US and Canada expansion in key airports and off-airport locations in key markets.
“We’ll be growing corporate and leisure business volumes by promoting our mid-week availability that enables us to meet business traveler needs at competitive mid-week rates,” Carr says. “We’ll also be listening to our customers and continuously improving the customer experience. This includes meeting with current and prospective corporate customers to get a 360-degree view of their mobility needs and share how we can meet those needs with our best-in-class suite of mobility solutions.”
As the car rental industry charts a course towards stability, signs of recovery are becoming increasingly apparent.
Recent shifts, including the move away from electric vehicles by some major players, underscore the importance of flexibility in meeting market demands. Expansions and technological advancements further indicate a commitment to enhancing the rental experience and catering to changing customer needs.
Looking ahead, the industry remains focused on continued growth and innovation, ensuring that the road to success is paved with adaptability and a dedication to meeting the needs of corporate travelers.
