Consumer inflation may be unchanged
Electric cars will be increasingly added to the mix, while hourly rentals and Airbnb-style leasing arrangements could be introduced
Consumer inflation for November will be closely watched in the week ahead. Economists are expecting the headline figure to remain at its recent lows, reflecting a decline in fuel prices. Inflation, as measured by the consumer price index, is expected to be unchanged at 3.7% year-onyear for November.
The car-rental industry will change beyond recognition in the next few years as new automotive technologies and evolving mobility trends revolutionise the transport landscape, says Lance Smith, sales head for Avis Budget in Southern Africa.
Electric cars will become the norm and fleets will include self-driving vehicles. Rentals could be charged hourly instead of daily.
Car owners whose vehicles sit unused for extended periods could even loan them to rental fleets and share the revenue.
Like all transport providers, rental companies are entering an era of deep uncertainty, says Smith. Historically, when rental companies install fuel depots at fleet centres, they amortise costs over 30 years. How do they manage that when they know the number of petroldriven vehicles in the fleet will drastically diminish long before that time is up?
The effect of some changes will be felt elsewhere. In SA, one of the pillars of the used-car market is rental vehicles, which are taken off the fleet and resold after about 30,000km. Electric engines are predicted eventually to have much longer lifespans.
“There’s already talk of the million-mile electric motor,” says Smith. “How will we factor this into our fleet life cycles?”
This will also affect the newcar market in which, in some months, rental firms account for up to a quarter of sales in SA.
The global trend towards vehicle usage rather than ownership — accelerated by rapid urbanisation — will affect the way rental firms conduct their business. It is estimated that, in the next few years, it will cost 10 times more to own and run a vehicle than to pay for mobility as needed.
In this context, why should rental customers pay for a full day’s hire if they only need a vehicle for a few hours — particularly when other hourly options are available? And why should rental companies bulkbuy new vehicles for peak periods if they can call on thousands of unused ones?
“If you’re away from Cape Town for a while, doesn’t it make sense to earn money on your car through a revenueshare with us?” Smith asks.
In the US, Avis is cooperating with new-technology service providers such as Uber, Amazon and Airbnb to look for future revenue possibilities. In 2019 alone, it is spending $225m on technology.
In may take time, but the changes taking place elsewhere will land in SA, says Smith. Consumers here may have been resistant to electric cars, but they will eventually carve out a place in the market.