The car rental industry has experienced an extraordinary metamorphosis over the last ten years. Changes in consumer expectations, paired with advances in technology and the surge of smartphone usage, have led to the rise of new modes of ground transport. Ride-hailing, car-sharing, and carpooling have all emerged alongside traditional car rental, rail, and bus services, pushing established companies to innovate in a digital-first world.
Todayās travelers demand seamless and expedited solutions for their transportation needs. As new contenders in the mobility space fiercely compete to capture greater market share, car rental companies face a stark choice: evolve or risk obsolescence. But how are these rental giants leveraging technological advancements to remain competitive? And can these innovations enhance both operational efficiency and the customer journey?
Current Pain Points in Car Rentals
For the average traveler, renting a car presents itself as an affordable and convenient solution, with various companies offering competitive rates on different models. Yet, for many, the experience can be less than ideal.
Enduring lengthy queues post-flight, dealing with tedious paperwork at rental counters, and discovering the supposedly “spacious” economy vehicle falls short of expectationsāthese are common grievances. Price transparency also remains an issue, with hidden fees and pressure to purchase extras like damage waivers often frustrating customers.
The internet has revolutionized the way consumers interact with brands and each other, and the car rental industry is not immune. Platforms such as Trustpilot showcase not only glowing reviews but also highlight negative customer experiences for all to see.
In an age where convenience reigns supreme, companies cannot afford to ignore public demand for a smoother rental process. Discontented customers will inevitably turn to alternative options. Itās no longer just about renting a car; itās about providing a mobility solution that allows users control over their time and destination.
As part of the wider travel and tourism sector, the car rental business is intricately linked to the hospitality industryās ongoing digital transformation. Technology is now set to revamp every aspect of car rentals, addressing the familiar frustrations of both business and leisure travelers while propelling the experience into the digital age.
The Smartphone Revolution
The advent of smartphones has irrevocably reshaped the travel industry, and car rentals are no exception. Travelers now use apps to research, book, and modify their travel plans on the go. The future of car rentals, much like the hospitality industry, is mobile-centric. As Lance Smith, a senior executive at Avis, articulated:
“As a company, we believe the future is mobile-driven. Apps are becoming the primary lens through which customers interact with brands, and soon, every business interaction will be powered by smartphone technology.”
Increasingly, car rental companies are adopting this mindset by centering their innovations around the customer, with a focus on enhancing the user experience. Modern mobile applications offer functionalities such as choosing a price range, selecting the make and model of the car, adding extras like GPS or Wi-Fi, and completing the booking processāall with a few taps.
Historically, key management has been a challenge for both companies and customers. Contracts had to be signed before keys were handed over, and businesses had to ensure their return. However, keyless technology now allows customers to unlock and start their vehicles remotely, using only their smartphones.
One such example is the “Avis Now” feature within the Avis app. It empowers users to bypass the counter, head straight to the rental lot, locate their car via the app, and unlock it with their phone before driving off. A similar convenience can be experienced with services such as Mustang rental Dubai, where premium models can be booked through mobile apps, providing luxury and freedom with just a few clicks.
The Rise of Connected Cars
The concept of “connected cars” and “cars-as-a-service” (CaaS) are quickly becoming the industry’s latest buzzwords, aligning with the demand for more flexible and mobile-centric solutions. The benefits to consumers are clear, but the impact on operations is also significant, streamlining back-end processes.
Connected technology provides companies with real-time insights into vehicle availability, location, and condition. This not only aids in fleet management and vehicle recovery but also holds the promise of reducing breakdowns through predictive analytics.
Moreover, connected cars are enabling the creation of new business models. Whereas travelers traditionally picked up rental cars at airports or fixed locations, remote access technology is opening up new opportunities for partnerships, such as between car rental companies and hotels, further expanding the industry’s reach.
Ridesharing: A New Competitor or Complement?
Since its inception in 2009, Uber has redefined urban mobility, alongside Zipcar and Lyft, shaking up the traditional taxi and car rental industries in the process. With the convenience of booking rides via smartphone, these platforms have introduced door-to-door transport solutions that show users exactly where their vehicle is and when it will arrive.
Many travelers, both leisure and business, have shifted from renting cars or taking taxis to using Uber or Zipcar for their simplicity and ease. Does this signal the demise of the traditional car rental industry? Not according to Alexander Sixt, Chief Administration Officer at Sixt, who asserted in an interview with WTM Insights:
“Uber and Zipcar serve a completely different demand than Sixt. Our mission is to offer comprehensive, on-demand mobility. One example is our app, where customers can choose between Sixt Limousine, Mydriver for business transfers, or the cost-effective taxi alternative, Sixt Rides.”
While these disruptors have upended the auto industry by offering alternatives to car ownership, companies like Sixt see themselves evolving into platform providers. They are working to minimize private car ownership by allowing third-party vehicles, including privately-owned cars, to be rented through their platforms.
Customer-Centric Innovations: Seamless Bookings and Payments
The way consumers search for and book car rentals is changing, prompting companies to rethink the entire customer journey. At the core of this evolution is the “in-destination experience.”
Integrating rental services into broader travel and tourism packages offers travelers highly targeted deals on tours, hotels, and more, creating an immersive experience. Additionally, flexible payment options are crucial for businesses aiming to meet the varied needs of customers.
Avis was the first in the industry to introduce split payment functionality via its mobile app, in response to research showing that 87% of U.S. travelers mix business with leisure. The “Split My Bill” feature allows customers to divide payments across two credit cards or payment methods, whether by total bill or rental days.
This innovation alleviates the issue of separating business and leisure expenses, providing greater flexibility for travelers.
Autonomous Cars: The Future of Mobility?
Envision a world where cars navigate themselvesāthis is the future of autonomous vehicles. While still in its infancy, the excitement surrounding driverless cars is palpable. Companies like Avis and Hertz are already exploring partnerships to become early adopters of this game-changing technology.
Uber, for instance, took a bold step by launching its first self-driving vehicle in Pennsylvania in 2016, though regulatory issues have since stalled its progress.
Despite the enthusiasm, autonomous vehicles still face numerous technical, regulatory, and ethical hurdles. However, one thing is certain: car rental companies must continue to invest in emerging technologies if they wish to meet the evolving demands of customers in the age of Uber and Lyft.
Ultimately, car rentals fill a niche that ridesharing services have yet to fully capture. For longer road trips or adventures requiring the freedom of a personal vehicle, renting remains a more attractive option. Furthermore, for the less tech-savvy or those concerned with safety, traditional car rentals provide a familiar and reliable alternative.
Only time will tell whether the industry can fully adapt to these seismic technological shifts. However, one thing is clear: the demand for personalized, convenient, and seamless service will drive the evolution of car rentals well into the future.
