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Car Rental Companies Riding the Car- and Ride-Sharing Wave

A white-hot topic in the car rental industry is mobility. It’s no secret that more people are relying on ride-sharing services like Uber and Lyft, as well as car-sharing services from companies like Zipcar. In fact, a report published by Certify, a provider of expense management software, states that “ride-hailing accounted for 68% of the overall transaction volume in the ground transportation category last year [2017], led by Uber and rival Lyft.” To put that in better perspective, car rentals accounted for 25% of transactions, while taxis accounted for 7%.

It’s clear that people are increasingly interested in convenience, less commitment, and opportunities to save money. This is why several of the major car rental companies have made significant investments over the last several years. The Avis Budget Group’s acquisition of Zipcar in 2013 is the most notable. However, car rental companies entered the car- and ride-sharing business much earlier.

Enterprise Holdings began offering hourly rentals under the Enterprise Rent-A-Car brand in 2005 (Uber was founded in 2009), and after growing through several acquisitions, it rebranded under the name Enterprise CarShare. Yet even before that, in 1994, the company began offering vanpool services in. It bolstered that part of the business with its acquisition of vRide in 2016. Zimride, a web-based ride-matching and carpooling network in North America, is another company that Enterprise Holdings acquired in 2013 to strengthen its mobility services business.

Car rental companies haven’t stopped innovating. They continue to launch complementary services to meet the demands of today’s flexibility-seeking consumers. Zipcar Flex, a new service available in the U.K. from Zipcar, is an example of a recently launched car-sharing service. According to the company, “Zipcar Flex allows members to spontaneously jump into a car and drive one-way across London, with the ability to drop the car off in one of thousands of spaces within the ‘Zipzone’, which now covers an area of over 235 km2 across North and South London.”

This is particularly interesting, considering that an increasing number of cities in Europe are requiring alternative car-sharing models. Zipcar also introduced a new service for weekday commuters. For a monthly fee and a per-mile rate, you have access to a dedicated vehicle. The price includes gas, insurance, maintenance, cleaning, and a dedicated parking spot.

Hertz, which ended its car-sharing services in the U.S. in 2015 but still operates internationally, decided to shift its focus in the U.S. to providing its rental fleet to drivers of ride-hailing services. Hertz chief executive officer Kathy Marinello explained, “It is profitable for us and I see it being a growth area for the next several years.” Moreover, she said, “It allows us to take cars that we normally would have gone to remarketing channels after use for daily rental and put them into the second-life use.”

Even U-Haul, a company known for its moving trucks and storage services, has been able to grow its UhaulCarShare car-sharing program. It now operates in 21 states. According to a company press release, “UhaulCarShare is a one-stop shop that includes insurance, gas, maintenance, a reserved parking spot and 24/7 roadside assistance. It’s all offered within the rate structure.”

The car rental industry is embracing people’s changing habits and a new operating environment. Car rental companies are responding with intelligent strategies, innovative ideas, and technology investments that can help drive operational efficiency, growth, and profitability. These are the strategic initiatives on which industry executives must focus to remain relevant. To learn more, download our new guide: 2018 State of the Car Rental Industry.

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Eugene Sefanov

Director, Industry and Regional Marketing

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