August 5, 2022

The Changing Landscape of the Car Rental Industry

It’s been a rocky few years for the car rental industry. The sudden stop in travellers mixed with increasing costs have forced many of these businesses to re-evaluate their offering and look to new solutions as a way to maintain or even grow their market share.

Getting to Know the Industry

For those new to the space, the car rental industry is primarily focused on car rentals to travellers in a foreign town for business or leisure. Set up normally around major transport hubs such as airports, international rail or bus stations, these businesses are there to enable personal transport needs for people arriving in the city.

From your simple ride to the SUV or minivan to fit the whole family, up until COVID, car rental businesses were a key provider of options and a key buyer for new vehicles. In the US alone, approximately 2 million vehicles were reporting more than $30 Billion in revenue. That’s just in the US. Just for 2018. For the rest of the world, the entire market has been valued at around $92 billion, with that expected to rise to more than 214 billion by 2027.

Set in their revenue generating ways, these businesses were constantly innovating from within to find ways to gain advantages over each other and decrease the administrative burden generated. These car rental management software systems were a key differentiator up until 2020. Post COVID, they have now become a game changer. Those without are being left behind as the market readjusts to new customer needs. The need for automation.

The Impact of COVID

Coming like a ship in the night, very few saw COVID coming. The huge impact it would have on every industry is still rippling to this day. The rental market is no different. The enormous sudden drop off in travellers forced businesses into a very difficult position never felt by owners before. Over the years, the ranges of expected vehicles rose and rose. Whether it was a luxury sports car, or a handy sedan, car rental companies had a huge amount of stock in the beginning of 2020. With very few customers.

After some time, the burden became too great and businesses needed to cut costs and did so by selling off a huge number of vehicles. This great sell off of 2020 saw a decrease of 25% of the available cars. This helped with the reduction of costs at the time however then led to a shortage of vehicles with the return of customers.

With the inventory now decreased, car rental companies were dealt a second blow. As they weren’t buying as many new cars directly from the producers, the vehicles were instead being sold directly to customers or retailers. This direct to consumer model being new for many of these car brands, found the better margin on sales a welcome change and rental businesses were no longer offered the heavy discounts for their purchases.

Current Challenges and a Modern Solution

With a reduced inventory and a higher buy price than before, rental companies were caught off-guard when the customers all started flooding back in 2021/22. Now a shortage of choice or even available cars has been hampering the “return to normal” that these rental companies have been longing for since 2020.

It is now, during the middle of the biggest droughts in available rental cars that we see the benefits to a high quality management software. Upkeep, bookings, verifications and stocktake in an automated process is even more essential the busier you become. Each minute saved per deal has the potential of earning the business more and more as the months go on. This drive for efficiency is in part led by the increasing cost for fuel and a surge for electric or fuel efficient vehicles. The rise in fuel costs are being passed through to customers with higher prices and new policies. 

Much in the same way companies are now rewarding “greener” choices made by the customer, the market is showing that automated processes and individualised check-ins are becoming more and more a favourite of the customer. The handshakes and clipboards of old are being replaced by an online experience that guides customers through the journey when they need it. This user flow from check-out to check-in, now totally automated, plugs perfectly into businesses established management software, allowing a hugely improved experience for customer and staff alike.

The real cost of COVID and inflation is now entering the customer decision making process. Greener more asynchronistic purchases are now done without human contact and at the total convenience of the customer. Companies without these processes are seeing the impact of how customers value choice and being empowered to pick-up and drop-off their rental car when they need it, not just when the place is open.


Like mentioned, car rental companies are looking for solutions to automate their processes. Read our article about how AI is changing the car rental industry. 


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