Car rental companies should be in good spirits. Hard hit by the lockdowns, activity in the sector is experiencing a sharp rebound. For a year the recovery is there. The holiday clientele is increasing sharply and the business clientele offers good prospects for growth. Something to smile regarding.
Despite everything, the renters are worried. According to Mobilians, representing mobility professionals and rental companies, “ the short-term rental (LCD) sector is currently experiencing strong pressure on vehicle supplies linked to the international economic context “. Put another way, rental signs lack cars and encounter many difficulties in getting new models delivered by car manufacturers. To fully understand the situation, let’s go back a bit.
Logistical difficulties
In 2020, to cope with the pandemic, and weak customer demand, the major car rental brands sold most of their fleet, up to half of it to Hertz, 31% to Avis or another 25% at Sixt and Europcar. And at the same time, rental companies have canceled many orders for new vehicles. With the recovery and the sharp increase in demand for vehicle rental, rental agencies have once once more opened their order books. But on the side of car manufacturers, supply cannot keep up with demand. In question the shortage of electronic components, the logistical difficulties linked to confinements in Asia, or even the closure of factories of automotive subcontractors which slow down the production of new vehicles. And, just to complicate the deal a little more for rental companies, car brands tend to favor individuals who offer better margins.
Rising costs
In this context of supply disruption, short-term rental is very hard hit, even though rental companies acquire nearly 12% of passenger vehicle registration volumes each year. Thus, if the registrations of new cars on the entire automotive market fell by nearly 34% between June 2019 and June 2022. Over the same period, the registrations of vehicles intended for the rental market fell by more than 51% %. In addition, lessors have to deal with rising costs of automotive raw materials and interest rates to finance their fleet.
So many reasons that lead Mobilians to call ” all the players in the sector, first and foremost the manufacturers, to initiate a new round of discussions without delay in order to find solutions to restore the supply of vehicles on the LCD (Short Term Rental) channel to a sufficient level to to be able to respond to demand “. In the meantime, to know if this crisis will have a favorable outcome, the consequence for the customer will be paid cash. After seeing car rental prices increase by 40% since the pandemic, prices are likely to soar even more.
