Day-rate Disruptors: Rental Agencies Sure Seem Excited About Mobility

Matt Posky
by Matt Posky

Car rentals have evolved rather dramatically in the new millennium. While you can still reserve over the phone before walking into an office to pick up the manager’s special for the agreed upon timeframe, alternatives are many. ZipCar transformed how some people get around an urban environment by allowing customers access to an array of automobiles at hourly rates. Seeing its potential, Avis acquired the company in 2013, expanding its function to include a less stringent return policy via ZipCar Flex.

Meanwhile, Enterprise has its own short-term rental services. Recently, the company has been on a kick to purchase as many mobility firms as it can. Hertz, which has been a little slower to dive into mobility culture, does offer alternatives to traditional rentals in specific markets. It also announced a new strategic partnership with the tech firm Aptiv last July to start testing autonomous fleets this fall.

This, of course, is all taking place in an era where carmakers are launching fleets of their own while attempting to rebrand themselves as data and mobility companies. But surely these rental agencies are just hedging their bets and trying to adopt new tech to better serve their customers. They’re not about to adopt the same tired rhetoric, are they?

“Today, we consider ourselves a mobility company,” Ohad Zeira, vice president of fleet ventures at Avis, told Automotive News in an interview. “Even rental itself … the definition of it is going to be shifting over time. So when we think about mobility, we think about the flexibility, about hitting multiple-use cases.”

Damn. When it rains, it pours, I suppose.

Frankly, it’s actually a little easier to understand why ride-sharing and rental firms would want to frame themselves as mobility companies. They don’t sell you a vehicle; they simply want to charge you for the privilege of using one. Using that definition, public transit authorities are also mobility companies — meaning you can call yourself a disruptor the next time someone sneezes on you while you’re riding the subway.

Alight, so what does the future of rentals look like? According to a series of interviews Automotive News conducted with executives from Avis and Enterprise, very much like today. But the companies involved remain optimistic. The growing assumption is that automobiles are no longer a growth market in the West. In fact, ownership has already started to decline in cities (at least in Europe) and many analysts expect that trend to continue in the coming years. But that doesn’t mean people will suddenly stop needing access to automobiles.

“As consumers choose to own less and share more, that’s going to be fruitful and helpful for rental,” Zeira said.

Avis’ ZipCar Flex is aptly named. Unlike the standard service, which mandates you return the vehicle where you picked it up from, Flex allows you to drop it anywhere on the street within a given area. The hope is that by providing customers with more options, they’ll be more apt to use the service. In practice, we’ve seen this turn other companies’ rentals into mobile trash heaps. But if you want to make sure your car is clean, you can go into a brick-and-mortar Avis and rent a vehicle that has a good chance of being cleaned beforehand. And Avis is doing a lot more than simply tweaking ZipCar.

From Automotive News:

In June 2017, Avis began working with Waymo, the self-driving car subsidiary of Alphabet Inc., to offer fleet support and maintenance. Through a partnership established in August of this year with ride-hailing company Lyft, Avis adds thousands of vehicles to the Lyft Express Drive program, in which drivers reserve vehicles to use for Lyft.

Avis plans to add Internet connection to its entire fleet by the end of 2020. Already, 100,000 Avis vehicles, about 17 percent of the fleet, are connected cars. To connect all its vehicles, Avis has partnered with automakers such as General Motors and Toyota. Without automaker partnerships, Avis connects the vehicles through its own retrofit solutions, Zeira said.

“As we go out and connect our vehicles, we are able to create and experiment with new features and functionalities that help our own operations or our own experience and then be able to take those learnings and package it up and roll that out to our other partners.”

It also has a mobility lab in Kansas City, which opened last November. There, Avis can test new applications and services at scale and with the community to see how it it plays. While it’s unclear what new systems are being examined right now, it should remain a useful tool for the firm.

Enterprise’s approach to mobility is a little different. Rather than trying to build from the ground up, it’s investing heavily into tech firms that are already working toward its future goals. Enterprise made numerous investment into companies like Quanergy (autonomous hardware), Mobileye (advanced driving aids), Mobi (automotive blockchain) and Migo (mobile apps). Automotive News also reported that it recently threw its weight behind a “well-known” Silicon Valley transportation company. An announcement on that is expected soon.

“We recognized the changing face of transportation and increasing digitalization,” said Bob Wetzel, Enterprise vice president of corporate development. “We operate on a local and regional level in certain areas of the world, whether it’s U.S., Canada or the U.K. We felt it would be faster to acquire that existing car-share company than to build it ourselves.”

However, most rental firms are inclined to agree that traditional, multi-day car loans will remain the core of their business for the foreseeable future. “We have approximately 70 million transactions a year,” said Enterprise spokeswoman Laura Bryant. “The large, large majority of that is going to be [rentals] over a day.”

“It doesn’t matter whether you rent for an hour, a day, a week, a month. It’s all the same to us. It’s just a different product, but in the end, we’re delivering a virtual car when and where you need it.”

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • King of Eldorado King of Eldorado on Oct 22, 2018

    I have to wonder if today's common standard (in the U.S.) for calculating car rental prices based on the rental period rather than miles driven, will be affected as more EVs hit the streets. When the subject of range anxiety comes up one hears, "Well, you can always rent a car for longer road trips." The $29.95/day specials can't last long if a significant number of renters are putting 600 miles/day on newish rental cars.

  • Watersketch Watersketch on Oct 22, 2018

    Where the rental companies can really kick a$$ is taking over fleets from companies. Instead of the 5 fusions 3 escapes and 2 explorers give the contract to one of the rental firms who will set up an online reservation system manage maintenance and insurance and refresh the vehicles every 30k miles. Much better than having to wait "for a good fiscal year" to replace the 6 yr old Escape.

  • Ted Lulis Head gaskets and Toyota putting my kids through college👍️
  • Leonard Ostrander Plants don't unionize. People do, and yes, of course the workers should organize.
  • Jalop1991 Here's something EVangelists don't want to talk about, and why range is important: battery warranties, by industry standard, specify that nothing's wrong with the battery, and they won't replace it, as long as it is able to carry 70% or more of its specified capacity.So you need a lot of day 1 capacity so that down the road, when you're at 70% capacity with a "fully functioning, no problem" car, you're not stuck in used Nissan Leaf territory."Nothing to see here, move along."There's also the question of whether any factory battery warranty survives past the original new car owner. So it's prudent of any second owner to ask that question specifically, and absent any direct written warranty, assume that the second and subsequent owners own any battery problems that may arise.And given that the batteries are a HUGE expense, much more so than an ICE, such exposure is equally huge."Nothing to see here, move along."
  • Roger hopkins The car is in Poland??? It does look good tho...
  • Kwik_Shift_Pro4X The push for EV's is part of the increase in our premiums. Any damage near the battery pack and the car is a total loss.