Rental car suppliers are right to feel like they are on a merry-go-round. First the pandemic slowed business down to a stop. Then after laying off staff and selling inventory to stay in business the suppliers felt the merry-go-round start back up. And start to spin faster and faster.
But, surprise, there are no new cars to replace sold inventory (thanks to a silicon chip shortage), and with the summer travel season upon us they must deal with a severe shortage of rental cars and staffing issues. Crowds queue up at airport rental desks, while parking lots outside sit empty. All of this drives prices through the roof.
The airlines faced much of these same issues, and their response was to cut inventory. During the Memorial Day weekend, the airlines cancelled over 3,000 flights. While it remains to be seen if airline passengers will tolerate this practice, the same solution isn’t available in the rental car space.
So, what are the car rental companies to do?
Here’s a quick look at how they will survive and thrive through this bump in the road…
- Avis Budget Group – Avis is betting the store on connectivity. Its mobile app, when used with a connected car, allows the traveler to monitor gasoline levels, (and automatically calculate customer reimbursements if the car is returned with extra fuel), report tire pressure and engine oil life and save personal settings for preferred seat position, car temperature and favorite radio station. Of course, the mobile app also grants keyless entry, with the actual keys stashed inside. As for inventory, Avis doesn’t appear worried about having enough cars. Its moving ahead with its Avis Car Sales program announcing the opening of several car sales locations across Florida, Texas, and Massachusetts earlier this year.
- Enterprise/National – To deal with supply issues, Enterprise has put in place a robust fleet preservation strategy, extending the normal cycle of its fleet and ensuring it has as many vehicles as possible to meet customers’ needs. This, in addition to the sheer size of Enterprise’s global network is a key consideration, enabling it to move vehicles from throughout the fleet to different regions when demand fluctuates. Offerings now include curbside rental for an efficient touchless experience, car sharing options for corporate fleets and a Complete Clean Pledge – including a Clorox disinfecting wipe in every vehicle rental. With the frequent traveler in mind, Enterprise has extended its loyalty program redemption deadlines, so members don’t lose out on benefits because they’ve been unable to travel. This includes members of National’s Emerald Club Executive and Executive Elite, and Enterprise Plus Silver, Gold and Platinum elite tiers.
- Hertz/Dollar/Thrifty – Hertz CEO Stephen Scherr addressed the situation on the company’s recent 2022 Q1 earnings call. “We are keeping cars longer, buying low-mileage pre-owned vehicles and in-fleeting new car supply, including electric vehicles, more quickly than before. We are also being careful to dispose of older vehicles from the fleet – so as to ensure quality of product.” Quality includes maintaining safety and cleanliness standards too, so all of their vehicles undergo a thorough 15-point cleaning process. “Our objective is to provide customers with a seamless digital experience every step of the way.” The company has multiple pilot programs underway to beta-test touchless exit gate and rental processes. It’s also added Tesla cars in more than 20 markets, with plans to be in 40 markets by year-end
- Sixt – As one of the first and most influential international car rental companies in the world, Europe-based Sixt has grown to over 2.000 locations in 105 countries. Found in almost every major city and tourist destination worldwide, the brand is present in airports, train stations, cruise ports, and hotels, where you can get great car rental deals on SUVs, convertibles and passenger vans. The company believes it has the youngest fleet in the industry in terms of mileage, and anticipating the shortage, has the inventory it needs for meeting demand. Sixt has also implemented new hygiene measures across all touchpoints of the rental process including but not limited to the construction of Plexiglas protective kiosks in all its branches, installing signage to guide customers to keep a safe distance, and ensuring all vehicles meet the Sixt Premium cleaning standard, a program under which every single vehicle is professionally cleaned using a multi-stage process before clients receive their rental. Currently the company is rolling out its digital check-out process, which helps the company better service business travelers and enable a less time-consuming interaction.
- Zipcar – An Avis Budget Group brand, Zipcar has a unique profile which will help it compete in the marketplace. Technically, a car-sharing service, Zipcar members can reserve vehicles with Zipcar’s mobile app, online, or in some places by phone at any time, either immediately or up to a year in advance. Members have automated access to the cars using an access card or Zipcar’s Android or iPhone app to unlock the door. (The actual keys are hidden inside.) Zipcar charges a one-time application fee, an annual fee, and a reservation charge. Fuel, parking, insurance, and maintenance are included in the price. Electric cars are part of their product mix, and where available get charged by Zipcar technicians at night while you sleep. Available by the hour, day or week, Zipcar operates in urban areas and university campuses in hundreds of cities, towns and universities around the world.
Teplis Travel has been advising its clients to consider multiple car rental discount providers ever since the shortage began a year ago. Among the other things corporate travelers can do to ensure a positive outcome for car rentals:
- Book as soon as possible – The earlier you book your car, the better your chances of getting the model that you prefer. To go one step further, we suggest you make sure the car you want is available before you book your flight or hotel.
- Adjust your rental times – Trying different pickup and drop-off times could result in better prices or a wider selection of cars from which to choose.
- Utilize off-airport locations – In addition to having more inventory, you can often save on taxes when you pick up your vehicle at an off-airport car rental location. (This tip could save you more than $100 in taxes!)
- Take advantage of corporate and personal loyalty program to avoid lines – If your company has a corporate account or you are personally a loyalty program member, you can often speed through the line and skip the counter at many locations. Examples of these programs include the Avis Preferred, Enterprise Plus, Hertz Gold Plus and National’s Emerald Club memberships.
- Pay with a credit card that gives you discounts – For instance, when you use the Chase Sapphire Reserve card, you can score discounts on rentals with National Car Rental and Avis. Similarly, The Platinum Card® from American Express provides several benefits from Hertz, including discounted rates.
Like other disruptive events in the past, the pandemic and the resulting supply chain disruption will pass. Business as normal will return, with all of us, suppliers and customers, wiser as a result.