Car rental – the road ahead
1 Jun 2018 - by Chana Boucher
With the availability of more transport options than ever, car-rental companies must adapt or die.
More car-sharing, streamlined reservations, check-in/check-out processes and self-service models, are what international transportation experts predict for the car-rental industry over the next three to five years.
The evolution of technology has created an on-demand environment, especially among younger travellers who are used to doing things on the go from their smartphone or tablet.
Added to that, in the US ride-sharing is becoming increasingly popular. Apps like Turo (described as Airbnb for cars) allow people to rent a car from someone in their vicinity, eliminating the need to make a reservation with a car-rental outlet.
A report by travel and expense report management software company Certify, found that in the US, Uber’s share of the ground transportation market continues to grow while car rental declined from 33% in 2016 to 25% in 2017.
If international trends are anything to go by, the South African car-rental industry is in for a shake-up. While Lance Smith, executive: sales at Avis Southern Africa, says ride-hailing services have had no measurable impact, Melissa Nortje, executive head: strategy, development and marketing at First Car Rental, says the biggest impact has been on one/same-day rentals. She says there’s yet to be a noticeable impact on rental requiring multiple journeys over greater distances because the Uber equivalent is more costly than renting a car.
“Interestingly though, availability of products deemed safe, such as Uber Black and the quality of vehicles of Uber X, are often an issue. Uber drivers cancelling bookings due to proximity to destinations is another problem, from airports specifically,” she adds.
Wils Raubenheimer, ceo of Hertz Rent a Car Southern Africa, says: “We’re of the opinion that Uber has its place in the mix, particularly in respect of customer demand for short-term, one-day rentals. We’ve seen some decline in areas like Gauteng, for example, where Uber is filling this demand, but there’s been very limited impact on longer term car rentals.”
Martin Lydall, chief commercial officer of Europcar SA, says although there are areas where car-rental organisations and other transport services can be seen as competing companies, their service offering is complementary. “We believe there will always be a space to provide cost-effective short- to medium-term transport solutions.”
Tracy Teichmann, manager of Sure Adcocks Travel in Pietermaritzburg, says the biggest impact on car-rental bookings came from the Gautrain. “We had a lot more corporate Joburg car rentals before the Gautrain. A combination of the Gautrain and Uber is more convenient for our corporates flying into OR Tambo for meetings in the Sandton area.
“They take the train and then taxi or Uber to the meeting. They don’t have to worry about finding and paying for parking,” she adds.
However, George Corbett, operations executive at Bidvest Car Rental, says the traditional car-rental customer base has maintained use of car rental but may supplement this with Uber for after-hours usage.
Mixing it up
With more options, particularly in urban areas, many travellers take a multimodal approach to getting around. This entails a combination of ride-hailing, public transport and possibly even vehicle rental.
A multifaceted solution, says Smith, is not something Avis is considering at this point. “But, our travel partners are already offering this to customers. We have our Avis Rental offering as well as Avis Point 2 Point and Avis Chauffeur Drive. If customers want to book a combination of these offerings it is definitely possible.”
Raubenheimer says Hertz is looking into multimodal ground transport in Gauteng, but not other regions as yet. The company is at an advanced stage with the development of its car-sharing business in international markets.
But, he says: “I believe it is still a long way off in South Africa due to lack of public transport, culture of ownership, as well as security and related issues.”
According to Lydall, internationally, Europcar has made extensive investments in car sharing and ride hailing. “With car sharing, there are some local challenges. In order for these services to be effective, they need to operate in high-density cities with an effective and complementary public transport system. There is also a higher risk in SA due to the low level of insurance in the market.” He says.
Lydall says Europcar’s core product offerings are car-rental and transfer solutions, which are underpinned by a dynamic and flexible home-grown operating system that is easy to integrate with other booking and reservation systems. “Further development to enhance these interfaces and to enable integration into multimodal systems is underway.”