If you’re on holiday or on a business trip, you have a variety of options when it comes to getting around. You could walk everywhere if your destinations are nearby, take public transport, get taxis. Each of these has their own advantages but also their limitations.
For travellers looking to maintain their freedom on both business and leisure trips, the go-to choice used to be renting a car. But now, rideshare apps like Lyft and Uber are presenting some fierce competition. How have they risen so quickly to ubiquity and what does this mean for the rent-a-car industry?
Transportation in the age of convenience
Today, our lives are all about convenience. We buy gadgets that allows us to connect with anyone in the world at any time, to access information at the tap of a screen, and to monitor and document our every step. Technology is making everything quicker, easier, and more convenient for us, and transportation is one area that has evolved greatly thanks to this technology.
Ridesharing giant, Uber was first founded in 2009, and has grown in popularity massively over the last decade. Statistics from Certify, a business expense management tool, showed that Uber accounted for a massive 56% of all ground transportation expenses in 2017, up from 52% in 2016. With Lyft accounting for 12% of the share in the same year, this leaves car rentals with just 25% and traditional taxi services with the remaining 7%. This represents an 8% drop in market share for car rental companies from 2016 to 2017.
So, why are so many people choosing ridesharing over renting cars? Although they can work out cheaper than car rentals depending on how you use them, it is more about the convenience factor than the price. Renting a car typically involves a lot of hassle: queues, insurance, pushy salespeople, ensuring the fuel tank is full when you hand it back and that any bump and scratches were documented before you set off.
Apps like Uber, on the other hand, can take just a few taps to arrange transport right from point A to B, along with simple, cashless payment. You can track your car using the app so that you’re not left waiting and wondering how long it’s going to take. Plus, once your journey is over, you can completely forget about it with no worries about where to return the car, just like a taxi service but typically with lower costs.
Does the rental car industry still have a place in the market?
The rent-a-car industry may be dropping off in terms of market share, but is it dead and buried or does it still have its place? Not all transportation needs can be met with the likes of Uber. Road trippers, for example, would struggle to get by using ridesharing services and would be much better suited to the freedom of renting their own car for the duration of their trip. Anyone travelling who values this sense of freedom without relying on ordering a ride would likely prefer to rent their own car.
The volume and length of trips you’ll need to take also play a part. If you’re on a business trip and are taking multiple trips per day for a couple of weeks, then renting a car may work out cheaper. Other reasons people might still opt for car rentals is if they are worried about the safety of using Uber or if they are not skilled at using technology. The younger generations are used to using all kinds of tech, while older generations might be more technophobic. While this gives car rentals a specific audience to target, it also suggests an increasing threat to the rental car industry as today’s children grow up and more and more of the population become accustomed to using smartphones and mobile apps.
What can car rentals do to stay relevant?
To prevent the rent-a-car industry going the same way as Blockbuster in the wake of on-demand film and television services, it is going to have to adapt and evolve in order to survive. Car rental companies need to utilise modern technology to improve the personalisation and convenience provided by their services. This can help them to fit into the new on-demand way of living that customers desire in almost everything they do.
The industry should also focus on how they can target those customers for whom Uber and Lyft would be less advantageous, as mentioned above. It is not enough to simply provide good customer service at a good price anymore; customers want a service that is tailored to them and is available exactly when and where they need it.
Only time will tell whether the rental car industry can survive the shift caused by technology and ridesharing services like Uber and Lyft, but they are certainly going to have to work hard for it if they hope to prosper in this new climate.