forced reduction of car rental fleets in connection with low demand for rental during the peak of the COVID-19 pandemic
global shortage of chips and components needed for the production of new cars, which significantly extends the time of their delivery from manufacturers
The shortage of vehicles will clearly be the biggest challenge for car rental companies in 2022, even according to the four above-mentioned representatives of car rental companies. According to the words of Michael DeLorenzo, the senior vice president of NP Auto Group, their company managed to buy new vehicles from their regular car manufacturers, but delivery times are not earlier than February 2022. Midway Auto Group was able to expand its fleet through new partnerships such as one with the HyreCar, however, the purchase of large vehicles and SUVs was, according to its president Brett Lippel, very problematic. Dan Miller from Basin Street Partners also pointed out another challenge in this context - the increase in vehicle prices, which will particularly affect smaller car rental companies.
At the same time, the discussants agreed that many smaller companies would probably be forced to rent vehicles with a higher mileage, which they would normally have excluded from their fleet. On the other hand, it is highly possible that car rental companies will have higher profits from the sale of used vehicles, as their long-term shortage in the market will continue in the upcoming period.
The staff shortage can currently be observed in several sectors such as gastronomy and hospitality or logistics and transport. The area of car rental is no exception, although the lack of qualified staff is not as big as in other sectors. The problem, according to the discussants, is the recruitment of new employees. A practical example was given by Brett Lippel from Midway, which recently opened several new branches, but during the hiring process, the company encountered up to 85% failure to attend interviews. According to Lippel, the main reason may be the shift to the online space since it is easier for the candidates not to show up at Zoom Interviews.
The Increased Popularity of Electric Cars
The popularity of electric cars has been on the rise in recent years, and the current trend is unlikely to change in the upcoming year. In the case of Green Motion, electric vehicles account for almost 40% of the company's fleet in some of its locations. According to the company's CEO Richard Lowden, thanks to the company´s eco-friendly fleet, Green Motion was able to buy enough vehicles even in the current situation, because there are plenty of electric cars on the market. However, most smaller companies do not have the suitable infrastructure to support electric vehicles. However, if car rental companies want to survive, they must become more flexible and start gradually implementing new eco-solutions.