Summary: Is the rental car a boom or bust industry? This article dives in and addresses where the core of the problems lies.
If you’re reading this, then your interest has definitely been piqued by the fluctuating rental car industry. With the significant rise in services like Uber and Lyft, rental car companies have been left in the dust – or that’s what people tend to believe.
Structural Changes Incoming
The rental car industry is experiencing a massive structural change that is impacting today’s business mode. Because of the growth of Uber and Lyft, the rental car industry is being pressured to create new pathways to financial success.
Rental car industries are now facing the reality that businesses need to reduce their overall capacity in order to survive this visceral surge. Unfortunately, the used car market, which works in tandem with the rental car industry, is currently in a weakened state. Here’s an example. Today’s major rental car companies are opting to purchase new cars with the intent of selling it back after a certain amount of years. In the midst of this time, they’ll look to try and rent this specific car out to clients for as high of a rate as possible. This is where the weakness of the used car market hurts the rental car industry indirectly.
Challenging Business Models
With a reduction in income generation from used cars, this decline will only hurt the rental business, unless a significant number of clients were to create a financial pathway. However, one cost-cutting addition many companies are adding to their business models is to fix their fleet and cost structure. With so much competition on the horizon, rental car companies must compete to stay afloat in today’s rapid-changing environment. As of right now, rental car companies do have a place in the future autonomous vehicle world, and will continue to unless drastic changes were to occur.