three days in june road trip around Rome in a rented Fiat 500: $276. SUV for a long July weekend in Orlando: $455 A week in August, cruising the Algarve on the family machine: $845 But costs are not the only problem. just no cars to rent in some directions.
What happened? Pandemic, chip shortage and war in Ukraine for starters. But this is not just a momentary shock; The car rental market could change forever. This will likely mean constant price increases, an influx of electric vehicles and the emergence of Chinese brands – and perhaps even the rise of peer-to-peer carsharing as a mainstream alternative if enough people are willing to share their cars with strangers. .
Everything started to fall apart at the beginning of 2020, when the car rental market crashed off a cliff due to lockdowns around the world. Nearly two-thirds of Avis-Budget’s airport rental business disappeared, and the company’s revenues declined 41 percent year on year in 2020. Europcar, 2020 revenue down 42 percentas well as Hertz revenue fell 46 percent before he applied for bankruptcy— although it has since been restructured and restored.
In response to the pogrom, rental companies sold off their cars. According to the British Car Rental and Leasing Association (BVRLA), a car rental affiliate, there has been a 30 per cent reduction in car fleets in the UK. In 2019, Hertz had 700,000 vehicles worldwide. That number fell to 481,000 in the first quarter of 2022, according to a company spokesperson. The Europcar fleet consisted of 293,000 vehicles in first quarter of 2020 but dropped to 187,200 in 2021.
The move made sense as two of the industry’s key markets, businesses and tourists, are stuck at home, explains Yusuf Allinson, an analyst at research firm IBISWorld. “There is no point in holding depreciating assets that did not bring in money,” he says.
But as lockdowns eased and travel rebounded, car rental companies were unable to restock cars due to a shortage of chips that halted productiona problem exacerbated by complex supply chains that depend on parts manufactured or assembled in Ukraine. The ensuing shortage of cars in rental lots more than doubled prices. Car rental prices rose an average of 135% during Easter in Portugal, Cyprus, Spain, Greece, Italy and France compared to 2019 levels, according to a consumer organization. Which the. “You buy a car at a higher price, you fill it up at a higher price, there is more demand – the increase in prices is quite logical,” says Allinson.
And there is little you can do about it. But if you want to avoid dizzying rental deals or find out you can’t get a family car, it’s best to book early. The way forward. Anyone planning at the last minute might not find this tip particularly helpful, but there’s another option: carsharing platforms that allow people to rent out their cars. Services like Truo and Getaround or Britain’s HiyaCar could fill a gap in the corporate rental fleet and help car owners hit by high fuel costs. HiyaCar reported a 220 percent increase in rental bookings compared to last year. earnings for car owners on Truo increased ten times.
Peer-to-peer car-sharing platforms are – clichéd though it is – exactly the same as Airbnb is for cars. But unlike Airbnb, which is currently valued at $78.8 billion, carsharing has yet to become widespread, despite the fact that cars idle 96 percent of the time. But now that old-fashioned rentals are expensive and hard to come by, carsharing may finally be here.
Xavier Collins, vice president of Truo, says convenience is another benefit of peer-to-peer networking: many people can find a car within walking distance rather than in a parking lot on the outskirts of town. This is handy if you’re already in town, but what about people flying in on vacation? HiyaCar is currently targeting local renters rather than tourists, saying it will add holiday support this year, but the other two companies are targeting travelers. Getaround is working to get parking spaces for their vehicles at transport hubs; in France, for example, there are special places near train stations.
Truo takes it one step further. Cars are delivered directly to the arrivals area at airports, with the owner either meeting tenants with keys or leaving the car in the airport parking lot, where it is unlocked via an app.
Apps like Truo, Getaround, and HiyaCar have the same benefits as Airbnb and other platforms in the so-called sharing economy: they don’t own anything. “The platform cars are not owned by the company,” says Even Heggernes, vice president of Getaround Europe. “The widespread car shortage doesn’t really affect us.”
But that doesn’t mean there are enough cars on those platforms – in the UK, HiyaCar has 2,000 cars per 150,000 registered users. Truo has 3,000 people in the UK and Getaround in the US It has 160,000. Exchange platforms rely on people letting strangers drive away in their car, which requires trust as well as efforts to keep vehicles clean, gas filled and other ready for renters. It’s a tricky question, although Heggernes, whose job it is to encourage drivers to sign up, says supply has increased due to the cost of living crisis as people look for ways to make extra money.
HiyaCar has one solution for a constant shortage of supplies: replenish the system with its own vehicles. HiyaCar has 150,000 registered users, 2,000 cars in total, 350 of which are part of the car club system. They are not owned by HiyaCar, but by automakers who are guaranteed a minimum income, and the goal is to fill cars where there aren’t enough yet, which the company calls the “cold start problem.”
“We have a lot of demand, but not enough cars,” says Rob Lamour, co-founder of HiyaCar. “You can’t just start in an area and suddenly have a bunch of cars to rent; It takes time for it to form.” Car clubs are also opening in areas where there are not enough vehicles at all, such as central London, where public transport can reduce the number of car owners, but demand for special rentals remains high.
But traditional car rental companies don’t sit back and let newcomers ruin their market. Even before the pandemic, rental firms were lobbying to more tightly regulate the peer-to-peer market, requiring stricter vehicle checks and restricted drop zones at airports.
After the pandemic, they are looking to increase their fleet in several ways. “Our global fleet is now almost back to pre-crisis levels,” says Tim Vetters, Managing Director of Sixt UK. But with vehicle purchases still difficult, the company is also buying vehicles from a wider range of manufacturers and keeping vehicles in its fleet longer.
hertz latest annual report shows the average car ownership period reaching an all-time high of 25 months in the Americas and 20 months in the rest of the world, compared to 18 months in the Americas and 12 months worldwide. in 2019. new from Europcar quarterly results show that the company is reaching out to Asian car and electric car makers to fill gaps in its fleet.
This tactic works, but slowly. Europcar’s pre-pandemic fleet of 293,000 vehicles, which has shrunk to 187,200 in 2020, has since rebounded to 243,700. This confirms Avis-Budget, which had a park 660,000 vehicles at the end of 2019; it fell on 533,000 next yearand grew to 590,000 k fourth quarter 2021. Profits also recovering, although US politicians express concern possible predatory pricingwith Hertz posting record quarterly earnings after bankruptcy restructuring.
Even without apps and peer-to-peer disruption, car shortages could lead to prolonged turmoil in the rental market, meaning prices are likely to remain high. One reason: The car rental industry was previously able to keep prices low in part because automakers were making too many cars, says Toby Poston, director of corporate affairs at BVRLA. Rental companies either bought extra cars in bulk at a discount, selling them off after their rental career ended, or setting up buyback schemes with manufacturers, making a deal to use the car for a short time before returning it.
Both schemes have favored car rental companies, but the recent shortage means manufacturers now have an advantage and no longer have to sell cars at a loss. Combined with inflation in fuel prices, this means car prices will remain high and rentals will remain expensive.
Whether this gives peer-to-peer car-sharing companies a chance to disrupt the market remains to be seen. But if they do, they likely won’t just hurt Avis-Budget and Hertz’s bottom line—they could change the entire car ownership business. Although not enough new cars are being produced, there is really no shortage of cars – we have more than we need, parked, underused. The UK has 40 million cars on the roads; in the US 276 million. The rental company’s fleet has shrunk by hundreds of thousands of vehicles, a difference that can be made up by cars parked on roadsides and driveways.
Credit: www.wired.com /