Electric cars, new mobility trends are set to disrupt car rental sector
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, said Lance Smith, sales head for the Avis Budget group in Southern Africa.
Electric cars will become the norm and fleets will include selfdriving 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, said 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 petrol-driven vehicles in the fleet will drastically diminish disappear, even — 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.
This will also affect the SA newcar market in which, in some months, rental companies account for up to a quarter of sales.
The global trend towards vehicle usage rather than ownership
— accelerated by rapid urbanisation — will affect the way rental companies conduct their business. It’s 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 bulk-buy 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 revenue-share with us?” Smith asked.
In the US, Avis is co-operating 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, said Smith. Consumers here may have been resistant so far to electric cars, but they will eventually carve out a place in the market. “The same applies to everything else in the mobility landscape. The only question is, when?”