What’s in store for car rental? Jenny Southan maps the changes you should know about.
When it comes to hiring a motor, Stuart Liddle, spokesman for Budget UK, says the demands of a business traveller will always be for “clean, reliable cars with fast, reliable customer service and value for money”.
But in a post-recession world still grappling to cut costs – while at the same time trying to save the planet – the car rental industry, like many others, is changing. Here is the low-down from those in the know on which direction we are headed.
FLEETS GO ECO
On the basis of proven oil reserves and the current rate of consumption, it is estimated that we have only about 40 years of black gold left – so it’s no surprise that car manufacturers are looking to alternative fuels and rethinking the design of their vehicles.
Meanwhile, as companies discover how environmental savings can also equate to financial savings (or simply pride themselves on being more socially responsible), travel policies are more commonly advocating greener transport options.
What this means is that rental firms are beginning to take investing in eco-cars more seriously – be they low-emission, hybrid or electric.
Nicko Williamson is founder of London’s environmentally friendly taxi service Climatecars, which has a fleet of 76 hybrid Toyota Priuses, with 45 more due to be added over the next year. Its clients include companies such as Unilever, as well as investment banks, advertising agencies and law firms. He says: “Although times remain tough, environmental impact is being readdressed by large businesses. Aside from the environmental benefits of eco-friendly cars, we will see rental companies ‘greening’ their fleets thanks to the ever-increasing oil price.”
Fabrice Quinquenel, vice-president of sales for Hertz Europe, says: “We were the first to launch a green fleet, which at the beginning comprised two types of cars – fuel-efficient vehicles with diesel engines, and hybrids such as the Toyota Prius. But now more manufacturers are starting to sell hybrids. We are expecting electric vehicles to be an area that grows as well, so we are starting to purchase and propose these in the US and Europe – we have just signed an exclusive deal with Nissan for its Leaf, so we will have 350 to 500 vehicles in the fleet [from this year].”
Hertz rented its first fully electric Chevrolet Volt in January but, owing to a backlog of orders for public purchase, it will be some time before the car rental industry can introduce them in large volumes. Quinquenel says: “We will have small numbers of these vehicles in our fleet from June. We will all adopt them in the future when there is mass production.”
Rob Ingram, director of business rental for Enterprise, says: “We’re seeing a greater number of corporate clients ask about the CO2 emissions of our fleet. Customers are also enquiring about electric vehicles [but] at this stage it’s more inquisitiveness than specific demand. We hope to have a small number of them on fleet in the next few months as we explore their rental potential.”
Per Voegerl, commercial director for Sixt, agrees that it is early days for electric vehicles. “Their popularity is patchy – we had some trials in Germany and the performance was not as good as we expected. First of all, the technology has its problems – a business traveller wants reliability and convenience of service; they don’t want to worry about whether the battery will last long enough or where the charging points are.”
Still, Ken McCall, managing director of Europcar UK, is optimistic. He says: “We will have our first electric vehicles in June, with more planned throughout the year. Other initiatives include using motorised scooters and electric bikes to drop off vehicles instead of a second delivery car.”
PRESTIGE OUT, EFFICIENCY IN
Fancy showing up at your next meeting in an Aston Martin DB9 or an Audi R8 Spyder? Sadly, for most of us, the recession has put an end to splashing the cash, so it’s unlikely you will be visiting eliterent.com when planning your next trip – it charges close to €2,000 a day for rental of one of these beasts.
Most mainstream rental companies also have a premium vehicle section with similar cars available for much less eye-watering amounts – Avis Prestige charges about £600 for a Porsche 911 Carerra 2S – but even then your Top Gear dreams are unlikely to come true, considering a Vauxhall Astra comes in at £52 a day. That said, Anthony Ainsworth, commercial director of Avis UK, says “the market for those kinds of vehicles has stayed strong”, which means there is still a core set of consumers who are determined to spend.
For most business travellers, Quinquenel notes, “the market remains at around the Ford Focus type”. He adds: “Not a lot of companies use prestige cars as they have better control over their travel policies these days and mandate what kind of car you can drive, although it will depend on the mileage and how many people are travelling. I think there is a lot more control over expenses as well, so anyone who is playing a bit and renting a very nice car will be caught.”
Voegerl agrees: “Our most popular cars for business travellers are in the VW Golf group. European corporates tend to book larger cars than in the UK because the Brits are a little more interested in saving money. It could also be to do with seniority – if you are travelling internationally then there is likely to be a higher proportion of top management renting cars.”
TECHNOLOGY POWERS UP
The need for speed is one of the key motivators that pushes technological innovation forward, and for the time-pressed traveller, every minute saved is something to smile about. So it’s no surprise that more and more rental companies are introducing automated self-service kiosks, which can reduce processing time to two minutes; online check-in, so all you need to do is collect the keys on arrival; and mobile applications that allow you to book from wherever you are.
Rob Ingram, director of business rental for Enterprise, says: “While online platforms have been around for some time, the increasing demand is for more specific functionality rather than just booking rental. In particular, customers want to be able to extend and terminate bookings within an online environment.”
But as Hertz’s Quinquenel points out, that environment is shifting away from computers to handheld devices. He says: “By 2015, more than 50 per cent of web transactions will [be done] on mobile devices such as the iPad, Blackberry or iPhone.”
Sixt’s Voegerl agrees: “About 3.1 per cent of our bookings are placed via iPhone, Android and Blackberry applications. Half of our corporate business is for hires for the same day, the following day or the day after, and for that a mobile application is ideal. We also have a free iPad app and the speed of booking is amazing – once you have saved your favourites, it can take less than ten seconds.”
He adds: “Sixt technology is driving quicker check-out and handling times by integrating a new counter concept, where you get a 2D barcode when you check in online. The first counters have been rolled out on the continent and the UK will get them this year.”
So how is in-car technology evolving? Quinquenel says: “About 30 years ago, ABS brakes were only on Mercedes and Bentleys but now they are in every car, and 20 years ago, air conditioning was a luxury option but is now a must-have. It’s a similar story with GPS – in the future it’s likely it will be fitted to all cars as standard, but not immediately as there is still money to be made in ancillary charges.” Ken McCall, managing director of Europcar UK, suggests GPS will be in even the most basic car models in his company’s fleet within three years.
ASIA-PACIFIC ACCELERATES
India and China are booming business destinations, and with new flights, hotels and offices comes the car rental firms. Hertz’s Quinquenel says: “We are already in more than 8,000 locations in 143 countries but we are expanding in China and have signed a joint venture in India.”
However, as anyone who has been to Bengaluru or Beijing knows, navigating the roads can be daunting. So what options do business travellers have? “We are going to offer both self- and chauffeur-drive options in China and India but 95 per cent is chauffeur-drive because roads are awful, as is language and signage,” Quinquenel says.
“Car rental in China is starting to pick up because when you go to places where a lot of US companies have been migrating – IBM, for example has thousands of employees out there, sometimes for two or three weeks a month – they want to self-drive because they know the roads.” Note that if you want to drive in China you will need to apply for a Chinese licence, while in India you will need an international driving permit.
Abhijit Pal, director of car supply at US hotel and car rental discount site Hotwire Group, says: “At the moment I think there is a lack of confidence about renting cars in Asia-Pacific but more products are becoming available, including car-plus-driver, and as customers become more savvy they will be more comfortable about using car rental options here.
“But language is a barrier, and it is often cheaper simply to hire a driver for the day. That may change over time as the region changes and the price differential starts to collapse between the two.”
SHARING IS THE NEW CARING
Car sharing is a relatively new concept that allows members to rent by the minute, hour or day. Following the success of the likes of City Car Club in the UK and Zip Car, the largest company of its kind in the world with more than 560,000 members in over 60 cities, car sharing is now a big focus for big hire companies.
Hertz launched its pay-and-go Connect by Hertz service in 2008, and Enterprise’s We Car followed in 2009. Avis’s Ainsworth says his company is also looking into it. “In Paris we have Avis On-Demand, which is a combination of 24/7 hourly rentals with keyless technology. Depending on the success of that, we will be looking to roll it out across Europe.”
Sixt has signed a deal with BMW for a car-sharing service called Drive Now, which was to launch in Munich in April – Berlin is up next, followed by other European cities. It will allow drivers to pick up and drop off vehicles wherever they like. The location of cars will be found by logging on to drive-now.com or to the Drive Now smartphone app, and keyless technology will mean vehicles can be opened using a computer chip inserted into the user’s driver’s licence.
Voergel says: “It offers more of an alternative to public transport than car hire. Time is so much of the essence for business travellers – an hour lost somewhere because someone is late delivering a vehicle can often be something you can’t make up, so we want to drive the car sharing idea forward in the UK and on the Continent.”
By 2020, Sixt hopes that Drive Now will have one million members worldwide – so in all likelihood, you may soon be car sharing too.
See the next issue for a report from our recent readers’ discussion on car rental.
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