Car clubs, sharing pools and even the prospect of selfdriving vehicles could transform the way the car rental sector operates, writes Rob Gill
Technology is helping to shape all elements of business travel but it may be that car rental is the sector that will see the biggest changes of all over the next few years.
While traditional car rental still makes up the bulk of sales for the sector’s big names – Avis, Hertz, Enterprise, Sixt and Europcar among them – they are all having to diversify the services they offer to corporate travellers to combat the emergence of new players within the wider ground transport industry.
This includes offering additional options such as car clubs – Avis Budget Group has owned Zipcar for five years, for example – and car-sharing pools. Europcar purchased a minority stake in peer-to-peer car-sharing specialist Snappcar in 2017.
Car hire firms have also moved into other areas such as professional driver services: Hertz launched a service with transfer specialist Blacklane last year while Sixt offers its own mydriver chauffeur product. The lines between ground transport suppliers are becoming increasingly blurred.
Iain Collinson, product manager at FCM Travel Solutions, says: “Car rental companies are rethinking their offering, increasing flexibility and looking to retain business that might otherwise have been lost, or to acquire new customers.
“An example would be Zipcar that offers rentals from £0.29 a minute. As more options are provided by suppliers, we’re seeing more questions being raised by our clients. But many of these options are yet to be used as much as they are discussed.”
A key strategy for car hire firms has been to offer corporate customers a more flexible and diverse range of ground transport options – particularly to attract younger 'millennial' travellers who are accustomed to using ride-hailing services such as Uber or Mytaxi.
Mia Ehrnrooth, manager of Global Business Consulting, which is part of American Express Global Business Travel, says: “Today’s travellers are increasingly preoccupied with how to integrate business travel into their busy lives, giving rise to demand for flexible rental options.
“Evolving ride-sharing services remain a key ground transportation trend and will continue to influence the car rental market.”
The rental firms have clearly been listening to this message and are aware of the threats and opportunities affecting their future prospects, even if the adoption of some of their new products can initially be slow.
Clive Forsythe, Corporate Sales Director for Europcar UK Group, says: “We recognise the importance of flexibility and choice when supporting business travellers in creating and implementing the most effective travel plans for employee journeys, taking into account cost, safety and environmental objectives.
“We offer a holistic approach that encompasses car use by the hour, chauffeur-drive and even the integration of public transport as part of the journey.”
As well as car clubs and car-sharing, rental firms are also offering more environmentally friendly vehicle options such as electric cars and hybrid technology which help to reduce emissions. Some new products also focus on reducing unnecessary journeys for business travellers such as a 'pick-up' service being offered by sister brands Enterprise and National.
“It eliminates the need for extra parking at customer premises, saves on CO2 as only one car is used and is often vital for lastminute rentals,” explains Rob Ingram, Director of Business Development EMEA at Enterprise and National Car Rental.
“More fleets are turning to pick-up over delivery and collection as well as the adoption of Enterprise Car Club. These vehicles offer instant access, reduce the need for traditional pool fleets and facilitate the introduction of electric and hybrid vehicle options into a company’s mobility mix and travel policy.”
One area that may be holding up the wider use of electric cars by business travellers around the UK is the lack of suitable charging points and fears about how far these vehicles can travel before losing power.
Nina Bell, Managing Director of Northern Region at Avis Budget Group, says: “At present, the UK’S charging infrastructure is patchy and the distances electric vehicles can travel are relatively unknown, which makes each car less desirable.
She continues: “But as charging infrastructure becomes more readily available, we expect drivers to become increasingly open to renting electric vehicles.”
Self-driving future Looking further ahead, there is also the tantalising prospect of how autonomous or self-driving cars will have the potential to revolutionise the corporate car hire sector.
For example, Waymo, which is Google parent company Alpabet’s self-driving vehicle project, is currently partnering with Avis on the pilot of a ride-hailing service in Arizona. Uber and Lyft are also working on autonomous vehicle projects.
It may still be way too early to assess the long-term implications of driverless vehicles, but most car rental firms think they have
As charging infrastructure for electric cars becomes more readily available, we expect drivers to become increasingly open to renting electric vehicles”
a big part to play in future developments. Rob Ingram, from Enterprise and National Car Rental, adds: “Many drivers experience new automotive technologies for the first time in rental vehicles.
“The car rental industry will no doubt be an early adopter and will be able to help introduce autonomous driving technology to millions of consumers, just as we’ve done with anti-lock braking, stop-start technology, hybrid electric vehicles and other new technologies,” he points out.
Harnessing technology With driverless cars not likely to become a practical option for business travellers to use for several years (if not longer), car rental firms are currently concentrating on more prosaic technological advancements such as improved booking and mobile systems, new partnerships with other transport providers and adding tools that provide enhanced data to corporate clients.
Supplying clients with key information around their employees’ vehicle use and the emissions produced is an important element of car rental companies’ services.
Europcar’s Clive Forsythe says: “We were the first company to introduce carbon emission and performance data by car group, allowing customers to make informed choices when selecting their vehicle. Europcar UK has publicly stated a commitment to moving its fleet to five per cent electric vehicles by 2020.”
There is also an increasing awareness of duty of care concerns by car rental firms – something they are tackling by introducing new technology that can measure risk factors such as fleet age, maintenance standards and the mileage driven, as well as tracking systems.
This data will only become richer over the next few years, says Hertz’s Richard Bowden, and even include information on driver fatigue levels and detailed behaviour.
“This will help corporate customers create personalised and smart policies but also dramatically increase driver safety.” he says.
With so much focus on the future and the onset of major technological advances, it can be easy to forget about a more pressing question that’s nearly always on a travel buyer’s lips: how much is car rental actually going to cost this year?
Carlson Wagonlit Travel and the GBTA (Global Business Travel Association) Foundation have predicted a “slight price hike” in average global car hire rates in 2018 as demand improves and rental companies “shift from a simple market-share focus toward profitability goals”.
CWT suggests that buyers can mitigate these expected price increases by increasing leverage with car hire suppliers by “knowing your current global patterns, how costs are distributed and the global market place, including information about strong regional suppliers”.
The car hire sector may be on the precipice of a fundamental technologydriven change in the way it operates but, just like every other aspect of business travel, prices will continue to be a key focus for buyers, particularly with more potential competition shaking up the ground transport sector.
The data supplied by car rental firms will become even richer, moving from tracking systems to even include information such as driver fatigue levels and details on driver behaviour”