Q&A: Running a Tight Ship

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Avis is one of the big players in the car rental space, but it’s a competitive space, with small margins and plenty of players going after the same business. So, editor Dylan Rogers caught up with Avis Southern Africa Chief Executive Keith Rankin, to find out how Avis gets its edge, and what the major issues in the car rental space are.

Q: Is the South African car rental industry currently in a healthy or unhealthy state?

A: The industry is under pressure to deliver required financial returns to its shareholders, due to the fact that the cost of doing business has increased at a much higher rate than we are able to recover from the customer.  

Q: What are the most important issues facing your industry?

A: The high number of vehicle accidents and cost of accident repairs. Also, the implementation of the e-toll system in Gauteng will add significant costs to our business, as well as complexity in dealing with our customers. New proposed labour legislation relating to temporary employees will also challenge our operations. Our inability to price rental rate increases in line with cost increases will also make it more difficult for smaller players to survive. 

Q: Please expand on the issue of vehicle accidents.

A: It’s a major issue in our country. Ten years ago, only premium luxury vehicles had airbags. Now, even small entry level low-cost vehicles have two airbags. This is great from a customer safety perspective and we support it 100%. However, the cost of repair is much higher.

Q: Do you believe South Africa is a nation of bad drivers?

A: I believe that we are a nation of aggressive drivers. 

Q: What’s the way forward with this issue?

A: We need to ‘drive’ a campaign of responsible driving. We all have a responsibility to tackle this issue. I also believe government must have a zero tolerance approach to reckless and dangerous drivers. There are too many unlicensed drivers on our roads.

Q: Speaking of the South African government, what are your feelings on the e-tolling issue and where it is at, at the moment?

A: We must pay for the road improvements. However, I believe that there are better ways to collect the money, which don’t require high administrative costs. I am also concerned about the compliance levels from the general public. If it is going to be similar to the payment of traffic fines, then it will create an administration and collection nightmare. It will increase our costs. The consumer will pay more for car rental and it will make it more complex for the customer.

Q: It’s tough to make a good margin in your industry. How do you differentiate yourselves from your competitors?

A: Our business is about getting all the little things right. Also, our people make us great – they are our competitive advantage in the market.

Q: Are there any developments, with regards your fleet, that corporate customers can look forward to?

A: We are always looking to put the latest models on our fleet. We buy 25,000 cars a year, and you can rent anything from a VW Polo Vivo to a Mercedes S Class from us.

Q: What about luxury cars?

A: We have been running Avis Luxury Cars for many years. This is for individuals who are passionate about their cars and brands. From the F-Type Jaguar to the Mercedes SLK, Land Rover Discovery, BMW X6 and many more.  

Q: What about your African footprint?

A: We are a licensee of Avis EMEA (Europe, Middle East and Africa). Avis is represented in most African countries except one or two due to sanctions. We operate South Africa, Lesotho, Swaziland, Namibia, Botswana and Mozambique as corporate-owned operations, and Angola, Malawi, Madagascar, Zimbabwe and Zambia as licensee operations. I believe there will be significant future growth opportunities in Africa.

Q: What’s the future of car hire? Is it electric cars, or something else technology-related?

A: Yes, electric cars will come, but it will take time for the vehicles to become more affordable.  I do not think there will be large numbers on rental fleets due to the cost of ownership and operational challenges, with regards the vehicle range and recharge periods. But, it will grow. Yes, technology will change our industry. There will be less human interaction and technology will be used to make it easier for the customer to do business with you. Car sharing is growing in the US and will become more viable in the future.