It’s been a turbulent last few years for rental operations to say the least. While the industry weathered an unprecedented supply crisis — and enjoyed record profits as a result — we may finally be seeing the light at the end of this long tunnel. Yet we’re now in a whole new environment with new challenges and demands.
To gauge how the industry overall fared and is moving forward, Auto Rental News caught up with various experts in the space. Here’s what they said about vehicle availability and sales, the path to electrification, incorporating technology and telematics, the changing customer experience, new business models, and more.
Addressing the Vehicle Shortage
Over the past year, most operators graduated from asking “Where are all the cars?!” and adapted to the new tight-supply environment that left rental fleets in short supply.
As replacing vehicles became hard, if not impossible, operators were forced to hold on to vehicles longer than usual. The era of flipping cars at 35,000 miles officially ended.
“Last year, a lot of operators understood the challenges around the lack of vehicles, which included 2021 orders that were cancelled,” Mark Novak, chief revenue officer at Zubie, said. “Operators had to start thinking about how to manage their current fleet more efficiently while figuring out how to take advantage of the used car market and the high rates they got from selling off assets. They were very strategic in terms of what vehicles they sold off and which vehicles they were willing to maintain longer.”
Through 2023 at least, limited vehicle availability will continue. However, most experts report some recovery on the horizon. There were finally early signs of increased allocation to rental fleet channels in fall 2022.
Operators still need to be clever in how they source cars as we inch toward supply recovery, though.
Fleet Sales Trends
Despite the continued supply strain, the silver lining is that demand stayed strong despite a robust pricing environment.
“Car rental pricing has been the highest I have ever seen in the 35 years I have been doing this,” David Bond, national sales manager for GMI Insurance, said. “For decades, it seemed car rental rates were stagnant, and with the car shortage, rates skyrocketed.”
Michael Muehlenfeld, GM of fleet operations at Walser Automotive Group, said that there’s traditionally been a 3% to 5% increase in vehicle costs year over year in production, but this past year has seen numbers much higher.
Muehlenfeld said the challenge moving forward is that rental companies had been paying over MSRP for vehicles, which is no longer the case. But with used prices softening, it will be a challenge to depreciate those higher priced vehicles correctly.
However, the future looks bright. “As we get past this shortage, we’re going to have a year where we have a [sales] number that’ll exceed any number I’ve ever done in the past, I have no doubt about that,” Muehlenfeld said.