As Uber, Lyft, and other ridesharing services continue to grow, it stands to reason that the emergence of these services would negatively affect the rental car industry.
But it turns out it’s not as cut and dried as it may appear.
According to car rental industry leaders, the need that rental cars fill for the public is not the same as the one being met by Uber and Lyft. In fact, according to USA Today, Avis Budget Group reported a three percent increase in revenues over the first three quarters of 2016 and Enterprise Holdings saw a 10 percent increase in its airport car rental revenue in 2015.
So, no real disruption here.
The reason for these upward trends is that rental cars and Uber are not an apples-to-apples comparison. According to Neil Abrams, a consultant in the car rental industry, “Typically, auto rental is lumped into the general category of ground transportation, including taxi and livery services. However, whereas taxi and livery are of shorter duration and mileage, the rental customer normally has a different requirement which demands more time and distance.”
Even with these positive numbers, car rental companies can’t deny that ridesharing is having an impact. According to expense management company, Certify, the number of corporate travelers who used Uber and Lyft over another form of transportation in Q1 2016 nearly doubled over the same period in 2015. Certify also reported that car rental dropped 10 percent over the same period.
The companies who dominate the industry are making choices that indicate their desire to continue to be leaders, but Chris Brown, executive editor of Auto Rental News, sees the rise of Uber and Lyft as a harbinger.
“The car rental industry really needs to be on a continuous improvement program when it comes to making access to rental cars more convenient,” Brown told USA Today. “Uber is a kind of wake-up call… I think there’s opportunity for car rental (companies) there. It’s just a question of whether the industry can take advantage.”
Avis’ answer to Uber is Zipcar, a company it purchased in 2013. It’s a hybrid between true car rental and ridesharing. Zipcar allows its members to rent a vehicle for as little as an hour or as long as seven days without being responsible for gas, insurance, or maintenance.
If others in the industry follow suit, the industry will survive and fill its niche. David Whyshner, Avis’ president and CFO, said Zipcar was part of its strategy to invest in technology and other capabilities in order to maintain its position in the market.
But as Brown cautioned, “Everyone, no matter what transportation sector you’re in, needs to wake up and see that there are changes happening.”
Photo credit: Atomic Taco (Flickr, Creative Commons)