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The challenge facing the car hire industry

In an age when technology is constantly shaking things up, keeping up with new ways to market products and services is essential for any industry – and the car-hire sector is no different. The advent of online travel agencies (OTAs) and aggregation sites has changed the game dramatically, and not always positively, while global financial and environmental pressures present a number of issues that stand in the way of progress.


So, while the global car rental industry is predicted to grow to $74.7 billion by 2020, the huge opportunities for companies to get in front of millions of potential car-hire customers have also created a number of other challenges that must be overcome for firms to succeed.

The pros and cons of taking the aggregation route

Shaking hands over a car

Sites like Opodo and Kayak are popular with customers because they allow them to see all the options quickly from a number of OTAs and direct car-hire firms, before deciding how to take things further. This is positive in that companies with strong deals, good selections, reviews and locations can attract a lot of potential customers, but it presents a number of issues, too.


The accuracy of the availability needs to be consistent, the prices need to be constantly checked to stay competitive, and excellent customer service has to be a huge focus — a couple of bad reviews can be a deal breaker, even if there are many more good ones. Maintaining the technology required is a time-consuming and costly task, and it’s so multifaceted that mistakes are almost inevitable.

Who goes direct these days?

Plenty of people. In fact, millennials, who hold 33% of the travel market share, prefer OTAs thanks to the choice and value on offer. While their rise has been good news for car-hire companies in some ways, with huge visibility on a number of global platforms, the increasingly high commission rates (up to 30%) mean it’s more financially beneficial if customers book direct.


Driving traffic to direct sites is therefore imperative, and rental companies can invest in a variety of ways to drive more traffic. One such method is to use an SEO agency that provides carefully targeted copywriting to help direct sites sit higher up the search rankings, which can massively increase exposure. Loyalty programs are also being heavily pushed to motivate buyers to buy direct.

The drive to go green

Electric car chargingInvesting in green cars is not only better for the environment, it also makes business sense due to the increase in oil prices. This not only pushes up the price of rentals but also impacts on the purchasing power of the travelling public. More stringent emission standards enforced by governments also plays a part, so investing in greener vehicles represents an essential challenge for car-rental companies.


An additional benefit to going green is the brand perception among potential customers, particularly the younger generation, who are conscious of the environmental impact of fossil fuels. They are therefore more likely to look more favourably on companies with more of a conscience.

Customers changing lanes

Sometimes a challenge can also be an opportunity. There’s been a large rise in customers changing tack to short-term rentals and car sharing in recent years, all ordered quickly from mobile devices and picked up easily with the minimum of fuss. This cheaper, tech-friendly option is expanding all the time, and becoming very popular, particularly in major developed cities, so the car rental firms have had to react.


Many companies now offer hourly rentals to capitalise on this new trend, and big hitters like Hertz and Avis have started working with Uber and Lyft to offer their expertise. They have also been reducing their fleets to match demand by selling off their superfluous cars and vans, enabling them to run a leaner business and decrease wasted days when cars aren’t on the road earning money.

Not the end of the road

Dead End SignIn a constantly evolving rental market, being agile enough to adapt and innovate is very important. The challenges posed by ever-advancing technology, environmental issues, and the race to grab market share in a super-crowded space will need time and money for car-rental companies in the coming years.


But with these challenges come huge opportunities to reach more potential customers. By investing in the latest online marketing and systems, green-and-lean vehicle fleets, and working hard to cultivate exceptional customer service that breeds great reviews and brand loyalty, car-hire companies can achieve exceptional results – for now at least.