Forecasts say that the coronavirus will affect the economy of the Slovak Republic. That is, of course, understandable. The whole economy has stopped for a few weeks and demand is decreasing. The area of industry and services, in particular, is experiencing the change the most, and the situation that was here in 2008 at a time of great economic crisis can very easily be repeated. However, there is no need to panic yet, because the situation is changing very quickly. For example, analyzes by Slovenská sporiteľňa (the largest commercial bank in Slovakia) assume that the impact of the coronavirus could slow down economic growth by 0.2 to 0.3 percentage points, which was estimated at 2.2% growth at the beginning of the year. If the crisis persists for a few more months, it could be 0.7%, but this is unlikely at the moment. The biggest problem is that the economies of individual countries are strongly interconnected. We already know that the corona crisis will hit the car industry because it is heavily tied to other economies, changing in response to demand and the car industry stopped its production. The truth is that not all car rental companies are able to react flexibly to what is happening in the market. If they work even a little outdated, it can be difficult for them to adapt to new conditions and react quickly. How will this affect the existence of car rentals? Will all car rentals survive or not?
This issue must be viewed from three perspectives. From short-term, medium-term, and long-term.
In the short-term view, car rentals have been helped by the government, such as financial assistance, deferral of rent, and lease payments. This arrangement has saved a high percentage of jobs in this service segment. In addition, several rental companies responded to the reduction in demand by lowering prices for customers. The price adjustment was reflected in almost all car rental companies. Demand has declined, mainly due to government restrictions and the closure of many businesses, and also because people have stopped renting cars for business trips, family holidays, or extended weekends out of fear. However, adjusting prices is not enough in this situation. If the price of services decreases and demand falls at the same time, this automatically leads to declining car rental sales.
In the medium-term view, car rental companies should be aware that, even after the measures have been completely taken out, it will take few months for vehicles to be rented at the same volume, as before the coronavirus outbreak. International tourism, which has brought a large number of tourists, will operate on a limited basis. People will definitely be more friendly and look at the price and quality of services provided. The summer season, which is usually the strongest, will be very weak this year and there will be a price war between car rental companies. It should also be realized that vehicles that car rental companies change every year or every six months will simply not be available, because large factories have stopped production. The price of new vehicles will rise and car rental companies will not be able to afford to change their fleet. Also, delivery times for the production of vehicles will be significantly extended, which will affect the quality of services provided.
Therefore, if a price change is the only measure that a car rental company introduces in the long-term view, it may not survive the corona crisis. So how is it possible to react to the current situation and at the same time look at the issue from a long-term perspective? Firstly, the car rental company must be flexible and responsive. The borders are currently closed, so there is no other way than to gradually switch to domestic tourism. There is a great assumption that domestic tourism will be a potential opportunity for car rental companies, especially in the summer. In addition, car rental companies should switch from brick and mortar car rental company to an online car rental company. The coronavirus has moved services into the online world like nothing ever before. Car rental companies should move away from the classic model and look for ways to establish themselves on the web. Establishing cooperation with business partners and intermediaries such as Rentalport - the largest platform for car rental in Slovakia - could also help. Rentalport mergers the offers of many car rental companies and it is the portal with the widest offer. At the same time, it uses its own channels for communication and marketing, thanks to which it greatly assists in the promotion of car rental company services.
So let's summarize the measures that can help save car rental companies in a few points:
1. Domestic tourism
2. Transformation into an online car rental company
3. Using the intermediaries promotion
4. Price policy change
All these facts mean that only car rental companies that are able to adapt will survive. In this case, Rentalport has an extremely good position, for both, for the customer and for car rentals, which are looking for different ways to run their business.