July 30, 2020
Even filing for backcrupcy in the case of Hertz. It is said in the media that changes in management and high debt/equity ratio might have been some of the reasons of them defaulting on their debt repayments.
Also, compared to the other members of the big 5 (Hertz, AVIS, Enterprise, SIXT, Europcar), it seems that Hertz was not the highest scorer in profitability either (-2,78% Profit Margin).
It is also interesting to see how SIXT takes a second place in profitability after the biggest of them all, Enterprise.
Even having the second highest profit margin, they have cancelled the dividend payments to investors first time in the history of the company. Not the best times for the industry, and some are better positioned than others to emerge in the times ahead.
With 60% of the fleet grounded, both airlines and aircraft manufacturers estimate that coming back to 2019 levels will take from 2 to 3 years. Predictions of recovery differ from agency to agency, and the situation is so unprecedented.
Customer behaviour will play a crucial part in the recovery of the current economy. We know that not consuming as before the pandemic will hold back the economy, but many of us see the opportunity of cutting on some unnecessary costs and prefer to stay safe at home as we have been doing for the last 2 months.
Long story short, we are under the worst economic downturn since the great depression of 1929, and it does not look like the recovery is going to be V shaped. Different consulting firms are giving different predictions on when the economy indifferent industries is going to come back to pre-covid levels. Values differ, and having so many different factors and geographies, the task of coming up with an exact date is tedious, for not saying an almost impossible task.
The de-escalation of measures are messy and unequal depending on the country and geography, making the management of the different branches complex to manage.
The only conclusion we can take out of this is that we cannot predict demand in the rent a car business, not even close.
And one of the main challenges that will be the customer behaviour imposed by the last two months. Restrictions have obliged people to develop habits that have changed the way we work, interact with our friends and family, and most importantly for the topic at hand, the way we move, or better put, how often we move.
This is a given and governments around the world are putting measurements on the table to help the companies in need to keep afloat, but the problem resides on what is going to happen during the de-escalation:
Are we going to go back to normal as if nothing has changed?
Have we already developed habits that will stay and change the way we work and communicate for the rest of our lives?
It is most probably not one nor the other extreme, but the reality will lie somewhere in the middle, and especially, in the case of remote work for the ones who are able to do it: “working from home because there is an emergency” to “working from home because I prefer to”.
Cars might be not an object of desire due to the low utilization for this group of people working from home, but moving by car seems to be something people are considering for intercity trips.
This does not mean the end of the world as we know it, but it means that, as many times before, we'll need to adapt to the new normal. Many of us will look at the past and hope everything came back to "that" normality, but many other will see the situation as a chance to create, to redefine, to shape the future.
We believe that the solution to such paradigm change comes from being able to adapt quickly to the change in customer behaviour due to the health crisis. It sounds easy, but it implies several things that this specific industry might not be used to.
For adapting, you need to be quick on your feet, and processes need to be set up for your organization to take decisions based on real data in a matter of days of weeks, so that the product market fit can be achieve again. People are not travelling as much, but it might be that local people are looking for alternatives to owning a car or especially to public transport. So, where a door closes, another one opens.
The real data from the customer needs to be also taken and processed more often. Segmenting the customers, creating specific campaigns for them and listening to what they have to say is crucial to make sure the business is going in the right direction.
When we feel that the companies listen to us and react to what we tell them, we feel good, and if they actually solve all our pain points, they are on the right path of getting our confidence back, thus generating the recurrency in local customers, that nowadays might help rental agencies come back to decent levels of business.
Some of the pain points of the rental agency are there since ages, but the current crisis is stressing them out, such as never ending queues or lack of transparency.
In a nutshell, look to other possible customers you might have ignored for years, segment them, listen to them and react to their feedback.
This is easier said than done, but there is a common denominator that can support the process, digitalization and data centralization of the processes.
With a platform like Eccocar’s the time to market is instantaneous, and all the customer, vehicle and reservation data is centralized, reducing operational costs, improving customer experience and and monitoring the usage and behaviour of your users in the platform.
For many agencies, due to the high demand during summer season, recurrence was not something they needed to focus on. Lots of local brokers were bringing reservations to the agencies in touristic areas, keeping the money, people and cars moving. Thise is someyear, volume of people moving to touristic places for holidays might not match that of the previous, and recurrence takes a more prominent role.Â
Having a system that allows direct contact with the customers is key to keep them engaged, offer them promotions and make them come back. Creating loyalty programs also can help making sure that not only tourists, but local customers get attached to your brand and services, becoming a mobility powerhouse in the local area, and not only necessary focusing on the foreign tourist.
It is true that tourists normally are in a more relaxed mood and spend more, being an easier and more profitable sell. But lowering the operational costs and having the analytic data to improve profitability will allow to compensate for the difference of money spent by the, normally, relaxed wealthier tourist.
To all rent a car agencies out there, in Eccocar we can help digitalise your rental agency business, a 100% self service as opposed to pushing you to models that disrupt totally their operation model. With our Round trip and Freefloating we help them digitalise your round trip operations.
The rentals could become totally contactless and paperless, appealing to more people who do not want human contact and do not necessarily like to wait in queues in the airports.
100% Self service - Onboarding, Reservation, Payment, eContract, Damages and many more.
The service and its results are immediately measurable, adding agility to the adaptation of the business.
Our integration engine and know-how allows us to integrate with your current RMS and DMS, for a better painless transition towards digital mobility services. Our platform is able to talk to your RMS, and be fully synchronized when launching the service with our white label app, as well as giving you the choice of the highest number of telematic devices for cars and micromobility vehicles in the sharing industry.
For the agencies who do not want to jump into connected car services nor contactless rentals, don't worry, we've got you covered with our integrations engine and strategy. We have already paved the way for you, depending on your level of commitment with the digital mobility of today, and here is our proposal to start from the beginning and not disrupt too much your existing business:
Include all your fleet in the new white label app we can create for you. Our white label app with your brand and colours will communicate with your RMS and will be fully synchronised at all times
Enjoy a new customer acquisition channel, and start measuring how your customer interacts with your product and interact directly with them.
Connect some cars to the cloud and start giving your customers a total contactless experience such as onboarboarding, payments, reservations, contracts and access to the vehicle, all from the tip of their fingers.
Your connected fleet will co-exist with your non-connected one and will give you a glimpse on how to start operating fully connected cars. If you do not want to rush it, don't worry, we won't push you ;)
Become a full mobility operator. With our Experience SHARE and RENT, we allow you to have round trip rentals and freefloating services in one single app.
The low investment in micromobility vehicles, such as mopeds, kick-scooters and bikes, make them the perfect mobile ad for the users to jump into your digital mobility services, reducing the cost of acquisition of your customers by a fair amount.
Once new customers are in your app, voila! Make sure they get to know the offer of your cars on your RENT service and not only the micromobility ones. Become their mobility operator of reference and delight them with all the vehicles they need at all times!
Mobility will keep evolving, and so will we. 100% customer focused, we will be evolving on those business models that make sense for you, for your geography and type of customer.