By Chris Brown
Published by Rentalcars1.com on Feb 21, 2020
Chris is the executive editor of Business Fleet Magazine and Auto Rental News. He covers all aspects of the fleet world.
Data is the new currency — and deriving actionable data from vehicles is now critical for auto manufacturers, insurers, commercial fleets, municipalities, consumers, and car rental.
Car rental companies are just beginning to understand how to mine and use this data today. The connected car is the gateway.
For car rental, what does “connected” mean? We’ll save a discussion of the greater vision of vehicle-to-vehicle, vehicle-to-infrastructure, and vehicle-to-everything for the future. For now, we’re talking about technology that tracks vehicles, relays vehicle telemetry, and allows remote access to them.
Connected technology is essential to the carsharing process and has been available for years via telematics. However, the great majority of devices are still installed manually on the car rental lot, a barrier to mass implementation.
When we get to the point where entire rental fleets are connected, car rental companies will look to harness this data in ways that will transform the traditional rental model.
Connected cars have the potential to:
- Bypass the rental counter and jumpstart the era of on-demand rentals.
Yes, the counter bypass is available today through loyalty programs and as standard practice for some boutique brands. However, a universally connected rental fleet will allow the traditional model to finally evolve to where most customers will book through an app and interact with the counter only if needed.
Connectivity will also drive more opportunities for on-demand rentals. This doesn’t necessarily signify carsharing will replace the traditional rental model; rather, it allows rental companies to create a more seamless experience and create partnerships to place fleet dynamically based on demand.
- Increase utilization and revenue per unit.
Knowing the locations of rental cars helps managers control any situation with greater precision — just ask operators how GPS tracking saved countless rental days merely by identifying a rental car in a police impound yard.
When all cars are connected, fleet movements can be studied over time for more precise daily, monthly, and seasonal fleet planning. Increasing overall utilization from, say, 80% to 84% will drive tangible results to the bottom line.
- Drive new ancillary sales opportunities.
Some worry a new model that bypasses the rental counter would hurt ancillary sales. True, the opportunity to pitch loss damage waiver in person would transfer to an elective through a mobile booking, which may erode a percentage of sales.
Yet bookings on a branded app — a necessity for enrollment and authentication in carsharing — bring ancillary benefits of their own. Those bookings are not subject to online matrixes with competing brands and don’t require a pound of flesh in OTA booking fees. Reducing those fees alone could far outweigh the lost revenue on ancillary sales.
Moreover, customers may gladly pay extra to avoid a line, while capturing their information as part of a loyalty program has benefits too. Understanding rental car movements in conjunction with customer preferences will produce geolocated sales opportunities in the form of in-vehicle notifications and discounts to renters.
As well, connected telematics can measure a fuel tank precisely, which presents a more transparent fuel purchase option than today’s system.
- Join the Mobility-as-a-Service (MaaS) ecosystem.
Car ownership will gradually evolve to MaaS, which allows access to multiple transportation modes — ride-hailing, carsharing, scooter rentals, and public transportation — on a single app.
Rental cars need to be connected and capable of remote access to plug seamlessly into this ecosystem.
- Partner with autonomous tech players to be service providers.
This benefit will manifest further down the road, but the groundwork must be laid today. Autonomous vehicle developers such as Uber, Alphabet’s Waymo, Ford’s Argo AI, and GM’s Cruise understand that partnerships are essential to be the service providers of the future.
For car rental companies to connect to this chain, the process to rent a car needs to become more efficient and seamless. This starts with a connected fleet.
When does this all come together? The process will accelerate when rental companies can have the ability to connect their entire fleet at the factory. Avis intends its entire fleet to be connected by 2020. If that happens, competitors won’t be far behind.
Outside of airports and urban areas, this sea change doesn’t need to happen as quickly. Yet for the car rental industry to best poise itself as transportation providers of the future, the connected car can’t come soon enough.