With travel budgets under tighter scrutiny than ever before, car rental agencies are feeling the pinch of price-conscious corporate consumers.
“The market is under enormous pressure,” says Martin Lydall, Chief Commercial Officer for Europcar South Africa, which operates over 100 branches across South Africa, Botswana, Namibia, eSwatini and Lesotho. “Volumes are down and there is pressure on price. However there is always demand for the low price vehicles that offer affordability, without compromising on safety.”
It’s not all bad news though, with strong demand over the festive season as corporate travellers took a well-earned break, perhaps cashing in some of those hard-earned loyalty points.
“The coastal regions, as forecasted, experienced high demand over the festive period,” says Lydall. “Rental in Johannesburg is generally quieter over the weekends, with it being a business hub, attracting demand during the week.”
That’s the best time to find a good deal, and while price is obviously a key driver of business, with competing agencies often offering similar vehicles at a similar price point, how do brands set themselves apart from the crowd?
“Providing service excellence is a differentiator,” says Essa Ebrahim Suleman, Managing Director of the Woodford Group, South Africa’s largest independent car hire company. “A few years ago, it would have been technology, or variety in fleet, or even price. With most suppliers on an equal footing in terms of these factors, it now comes down to how well a car rental company can satisfy and anticipate the needs of the client. As the market continues to change, we believe that emphasis on service will be the main differentiator.”
Customers certainly want convenience, whether it’s paperless rentals or the ability to return the vehicle without the tedious wait for an agent to receive the keys. Time is money, and it’s one reason why the convenience of ride-hailing services could easily be seen as a threat to the industry.
While the rise of services such as Uber and Bolt have undoubtedly eaten into the traditional market share of rental agencies, rental operators appear unfazed.
“Frankly, there hasn’t been much impact on the business,” says Suleman. “The main advantage is the factor of control. Whilst e-hailing services allows for a quick solution when getting from one place to another, it doesn’t provide the traveller with the control associated with booking and using a vehicle.”
Lydall also sees ride-hailing “as a symbiotic offering. Generally your one-day trips attract the use of these services. For longer rental lengths, car rental remains an attractive offer, with its affordability and convenience. For consumers making multiple trips, car rental offers great value.”
Established brands are also well placed to compete with e-hailing start-ups.
Long before the Uber app became ubiquitous on our smartphones, brands such as Avis and Europcar catered for clients that wanted the flexibility of car hire without the hassle of driving themselves. Today the likes of Avis Point 2 Point, Avis Chauffeur Drive and Europcar’s Chauffeur services allow savvy agencies to have their car rental cake with the icing of point-to-point business.
With its chauffeur services and rental options, “we believe we offer great value in a very competitive space in the market,” concludes Lydall. “We believe our service offers an affordable mode of transport as one of the leaders in mobility.”