Car rental on the rise?

WAY BACK IN 1807, A FRENCH CHAP CALLED NICÉPHORE NIÉPCE – widely credited as the inventor of photography – and his older brother Claude introduced the world to the Pyréolophore, reck­oned to be the first-ever internal combustion engine.

Their contraption had a major draw­back, insofar as it was fuelled by a complex mixture involving pulverised dried lycopo­dium moss. Unfortunately, lycopodium moss grows mainly in the tropics, and was thus not widely available in 19th-century France.

However, the invention did work after a fashion, in that it propelled things forwards. All the Niépce boys had to do was mount it on a wheeled chassis, and automobilisme would have been born, and – 80-odd years later – engineers Karl Benz and Gottlieb Daimler would have had nothing to do. Instead, the brothers went and attached it to a boat.

Fast-forward to September 1908, when Henry Ford’s first “car for the great multitude” rolled off the production line. Although Ford promised that the Model T would be “so low in price that no man making a good salary will be unable to own one”, it still cost US$260 at a time when the average rate of pay was 22 cents an hour.

Fast-forward another ten years, when 22-year-old Walter Jacobs recognised that plenty of men were actually not “making a good salary”. He duly set up what is believed to be the first car rental business.

Five years later, the company was pulling in revenues of around US$1 million, and in 1923, Jacobs sold his brainchild to the president of Yellow Truck and Coach Manufacturing Company. His name was John Hertz…

Today, Hertz Corporation – which includes the Dollar, Thrifty and Firefly brands – has a fleet of around 490,000 in North America and over 170,000 cars internationally.

Colossal though those numbers might be, they are nothing compared to those at Enterprise Holdings – which includes the Alamo and National brands as well as Enterprise Rent-A-Car and Enterprise Fleet Management – which boasts a total fleet of 1.7 million cars. Avis Budget has a fleet of around 300,000. The other major players, Europcar and Sixt among them, take the total to well over three million. The odd thing is that the demand exists to sustain such vast numbers.

COMPETITION FROM RAIL

One could be forgiven for thinking that dramatic improvements in UK and European rail services and a far more business-friendly approach from train op­erating companies, coupled with greater corporate awareness of environmental issues, would have sounded alarm bells (if not a death-knell) within the rental sector.

But this is not the case. Throughout the post-recession era, the Guild of Travel Management Companies’ (GTMC) quar­terly transaction statistics have consistently shown substantial growth in rental car reservations – with percentage increases significantly higher than those for air and hotel bookings.

Of course, rental companies and the cars they offer are becoming greener. Europcar is integrating electric vehicles into its fleet, and has introduced Nissan LEAF cars in Birmingham and Bluecars in Paris. It is also developing an electric car-sharing scheme in Malaga and offers ‘green driving’ tips on its website. Hertz UK’s Green Collection includes LEAFs, Ford Focus Ecoboost cars and Mitsubishi Outlanders, which claim to manage 148 miles per gallon; and Avis claims to have one of the youngest fleets in the business.

Rob Ingram, EMEA business develop­ment director for Enterprise Rent-A-Car, is forthright about his company’s green credentials. “Our global fleet has lower average emissions every year,” he says “because people want greener cars and manufacturers produce ever-more efficient models.”

He adds: “We’re aware that many corporate travel policies now mandate low-CO2 cars and we make sure that happens. For example, our booking tool can ensure employees only rent vehicles below a certain emissions threshold.”

OTHER PRIORITIES

Corporates may care, or at least in­sist that ‘green’ boxes are duly ticked, but GTMC research suggests that travellers themselves have other priori­ties. Late last year, it published the results of a survey – prepared by Avis and con­ducted by Audience Net – to establish the motorists’ mindset.

The ‘big four’ car hire companies – En­terprise, Avis, Hertz and Europcar – domi­nated the research with 73 per cent of all bookings made in the UK. When looking at rental companies abroad, Hertz dominated the results for all age groups, with Europcar second and Avis third.

Spain was the most popular country for car collection amongst business travel­lers with 18 per cent of all bookings, fol­lowed by France (16 per cent) and the US (14 per cent).

The study showed that when asked why they chose car travel over other forms of transport, the main reasons were conve­nience, value and comfort. It also found that price was the most important factor when renting a car (67 per cent) over 24/7 emergency assistance (60 per cent).

Having technological features such as Bluetooth connectivity in the car and a good audio system ranked lower in pri­orities for business travellers than might be expected (32 per cent and 25 per cent respectively), but the study did show that cleanliness of the vehicle and the speed and quality of the collection is much more important for business travellers (58 per cent and 56 per cent).

Cleanliness isn’t something the rental companies brag about – it’s a given – and the big four have already addressed not just collection issues, but drop-offs as well.

The GTMC research canvassed more than 1,000 business travellers who, on average, hire cars for business six times a year, and they’re a fickle bunch.

The GTMC states that for many car hire companies reading this research, a glaring opportunity would be revealed in the fact that only 47 per cent of frequent users said they were contracted to a single car rental company, leaving one-in-two able to choose between other companies, and just 6 per cent not sure of their policy. It believes the opportunity for brands to build loyalty is “clearly significant”. (Although awkwardly, if laudably, Avis disproves the point – at least in the US. In November, it was identified as one of the top 40 consumer brands in the Loyalty Leaders List, compiled by a New York-based “brand and customer loyalty and engagement research consultancy”.)

However, there does seem to be some­thing of a disconnect. To their credit, car rental companies have met the needs of the corporate traveller – picking up, and dropping off, a small, economical eco-friendly car, at an acceptable price, could hardly be easier.

With corporate focus on keeping the traveller satisfied, the big question has to be whether the rental giants have not only met, but exceeded, the end-users’ aspirations. What do they – the men and women who actually have to drive these things – really want?

When the Niépce brothers bolted their internal combustion engine to a boat, they no doubt delighted all those wealthier oarsmen with ready access to pulverised dried lycopodium moss. The rest of the oarsmen (indeed, the rest of the world) shrugged and moved on.

Car rental companies have made life easy for a relatively small number of people, and even the converted aren’t particularly loyal, but the transaction volumes – and those fleet numbers – continue to rise. Nicéphore Niépce got it staggeringly wrong; Walter Jacobsclearly didn’t.

BUSINESS TRAVEL AWARDS 2016

When Enterprise won Best Car Rental Company at this year’s Business Travel Awards, EMEA business development director Rob Ingram says he was “surprised, but not shocked”. “It helps to get an external perspective to show we’re getting things right and we’re incredibly pleased that the judges chose us,” he says. “Our team has put a huge amount of work into our business travel offering. When our ‘strong company ethos’ was highlighted by the judges it made me feel very proud indeed.”

Even with a glittering award in his corporate trophy cabinet, Ingram recognises there are still challenges ahead. “Rental can be treated like a commodity, but experienced travel buyers know the value it can provide if managed effectively. Because car hire is a smaller percentage of businesses’ travel spend, compared to airlines and hotels, it’s often not seen as a high priority. However, with the complexities that exist, a corporate account that’s been well implemented is critical to avoid delays, increased paperwork and additional costs.”Like awards, it would seem, car rental contracts should come as a pleasant surprise rather than a shock.

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