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The challenges that new mobility is placing to the Rent-a-Car

Trends

November 14, 2019

9 MIN of Reading

An app installed on your smartphone, a simple registration and a tap can be all it takes to rent and start driving a vehicle that you have located near you. The solution is simple, practical and is part of the new form of mobility in big cities, representing a change in the rent-a-car business model.

Going to a Rent a Car to hire a vehicle for ‘x’ number of days and returning to the same place to drop it off is no longer the only reality for car rental services, which have started to adapt their offer to a new user profile - more technological, mobile and motivated by the user experience. A new business model has thus emerged and ‘has transformed the process of renting a car into a much more convenient and immediate reality’, explains Duarte Guedes, CEO of Hertz Portugal.

Offering car rental services for around 100 years, Hertz Portugal is one example of how the sector is changing. The new Hertz 24/7 City, is one of the first carsharing systems to operate in the city of Lisbon, with a 100 % electric fleet and access to technology developed by a Portuguese start-up.

New business models for the automotive industry

The user profile change of the new generations - who don't want to own a car - together with the difficulty of circulating and parking in big cities, have called for a change in the rent-a-car segment and in the car market in general. Data has been a key part of this change, enabling to gather information on how people move around cities and identify business opportunities.

To meet the new challenges, car manufacturers have developed carsharing solutions for cities. Clear examples are the PSA Group's Emov and BMW's DriveNow projects.

In the case of rent-a-car companies, knowledge of the new reality has led to new ways of delivering the product and working with other players to offer tailor-made services. “The customer will be a user of different modalities, depending on what is most convenient in each situation”, explains Duarte Guedes, considering a context in which the world is moving from a property economy to a sharing economy.

The new challenges for car rental services

To make this reality of carsharing and new car rental services possible, there were two key factors: telematics and the digitalization of business. Duarte Guedes explains why: "The so-called digital businesses put increased pressure on logistics, and data [from telematics] is fundamental for those who manage" this area.

When it comes to car fleets, these are extremely competitive models and therefore optimising operating costs is also a key factor, says the CEO of Hertz Portugal. For example, having access to automotive data, which enables fleet maintenance and repair costs to be estimated, has become crucial for car rental companies. On the other hand, telemetry makes it possible to monitor the correct use of the car by the customer, which is reflected in the final cost of the service provided.

Changes are taking place, but, according to Duarte Guedes, a real revolution in the car rental business will only happen when autonomous driving is widely used. Until then, he says, fixed locations, such as shops and rental agencies, will continue to allow for gains in scale and other commercial opportunities.

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