Car rental companies facing digital competition
Well-established car rental companies are facing competition from new entirely digital services, all while trying to make their mark in the car-sharing service. Avis’ Zipcar and Europcar’s Ubeeqo wish to get hold of the market by using their parent companies’ know-how in car renting.
One could imagine that car rental companies aren’t in the best of shapes due to their aging renting process and the on-going bad customer service. However, Europe’s first car rental company, Europcar, recorded a turnover increase of 3,4 % in 2018.
For their part, American giants Hertz and Avis Budget have grown by 2%. “Seniors are getting richer, and they travel more, which incidentally increases car renting companies’ activities,” analyses Nicolas Louvet, 6-t research bureau director.
Same activity but different
Those well-established companies are also dipping their toe into car-sharing. In 2012, Avis Budget purchased Zipcar, the world’s first car-sharing company with 12.000 cars worldwide. Three years later, Europcar got hold of start-up Ubeeqo. Last May, the latter obtained 850 ex-Autolib’ parking spots from Paris’ city hall.
“Car-sharing start-ups don’t make any money because the business model has not yet been found. It’s a form of laboratory,” says Laurent Sculier, President of Avis Budget France. “With 400.000 cars, we have significant know-how in purchasing, logistics, maintenance, or insurance,” explains Europcar’s manager. In cities such as Dublin or Cork, Ireland, Ubeeqo is already profitable.
As of today, airports and train stations represent 95% of car rental companies’ activities. However, they are still stuck in an old-fashioned way of working and fully digital companies are trying to get a bite of their profit cake. A company such as Virtuo, which is already present in four countries, fifteen cities with 60 stations.
What Virtuo offers since its beginnings in 2016, is a fully digital long-term car renting solution. Clients book a car online and they access the locked-up parking. They enter and start their cars all with their smartphones. Virtuo managed thus to reduce its costs by around 30%, but it doesn’t offer a low-cost service. “Our promise is to offer a premium car renting at the price of a conventional one,” explains Thibault Chassagne, co-founder, and CEO of Virtuo.
What about electric cars?
Electric cars in long-term renting have a difficult situation. The will from the renting companies is there but clients aren’t. Europcar recognizes that tourists visiting a country aren’t the ideal clients for an electric car with little range or that needs to be plugged-in.
Therefore, car rental companies don’t purchase electric cars. In August, they only counted for 1,1% of the French renting fleets while the private market stood at 1,8%. Still, Europcar believes electric cars have a place in the city and wishes to transform 20% of its Ubeeqo fleet to electric or plug-in hybrid by 2023.