“Your employees are the bridge between tech and customer experience. They can turn a frustrated renter’s bad day into a loyal customer.”
Photo: Auto Rental News
The car rental industry has finally exited the roller coaster of the post-pandemic years. That’s a welcome development, as vehicle supply is no longer an issue, and fewer irate customers are waiting in the lobby for cars.
Travel demand is relatively strong: According to U.S. Travel’s forecasting, leisure trips have already surpassed 2019, the pre-pandemic marker year, and will continue to increase over the next three years. However, international inbound and domestic business travel won’t recover to pre-pandemic levels until 2026.
But we’re also back to some familiar fundamentals. While new vehicle costs are higher than ever, automakers have the inventory, and they’re cutting deals. Meanwhile, used car lots are full of vehicles that aren’t commanding the same prices as two years ago. Translation: the industry’s sky-high profits in 2022 and 2023 have returned to earth, with revenues per unit (RPU) reminiscent of the days before we worried about choosing an N95 or P2 mask.
Welcome back to a much more manageable — if not insanely profitable — environment. But that doesn’t mean you can rest on your laurels. The pandemic has forever rewired the way businesses operate, including car rental.
During the supply chain strains after the pandemic, businesses adopted an “obsessive efficiency” mindset realized through technology adoption.
McKinsey reports that the pandemic has accelerated the digitization of customer interactions at least threefold. We’ve shifted to ordering from a kiosk at McDonald’s. When was the last time you stood across from a bank teller?
Car rental is coming on in advancements that digitize the rental process and facilitate rate management, damage detection, and self-service rentals.
Much of these advancements depend on telematics, which smaller car rental companies have been slower to adopt. That is changing, however, as 99% of new passenger cars have embedded modems that remove the hassle of installing an aftermarket device every fleet cycle.
Telematics is traditionally used to pull data such as location, fuel level, tire pressure, and odometer readings, but those functions are now considered table stakes.
Telematics’ real value lies in combining data sets to make business decisions such as tying various metrics to a rental contract’s overall revenue, understanding and predicting maintenance issues, using location data for co-marketing opportunities, and facilitating decentralized rentals with lock/unlock features and geofencing.
That value is unlocked exponentially with the most significant generational technological development: artificial intelligence (AI).
In less than two years, AI — specifically generative AI — has become the most essential productivity tool on the planet. It’s called the new electricity and “bigger than the internet.”
It had very little incubation — when ChatGPT launched, users immediately harnessed it. What other technological revolutions in history have followed this trajectory?
For car rental, GenAI is already being used in booking processes, inventory management, chatbots, analyzing customer behavior and preferences, and ways to optimize vehicle acquisition, usage, and resale strategies.
What took days of reviewing reports and data can be done in seconds by having a conversation with a program. You’ll need to learn how to use AI in your rental business.
Inflation will be stubborn, exacerbating the need to lower operating expenses. There’s a mindset that AI is the panacea, mainly because labor costs are ever-increasing. AI is forcing new conversations around labor optimization in self-service applications, customer support, IT departments, and hourly employee counts.
Here’s the caveat: Be wary of headcount reductions for customer-facing staff.
For smaller rental companies, your people are your brand. If the big guys want to beat you on price, they will. But you can win with the right people. Car rental is still a “people business,” particularly neighborhood car rental.
Your employees are the bridge between tech and customer experience. They can turn a frustrated renter’s bad day into a loyal customer. An excellent outside salesperson will yield more benefits than an AI-infused search engine.
Auto Rental News associate publisher Chris Brown.
Photo: Auto Rental News
When adopting tech, specifically AI, shift from an “efficiency” mindset to “empowerment.” Frame technology as a tool to create a better work environment and customer experiences. Employees who understand the value of technology will use it more effectively.
Show your employees that an app or algorithm can’t replicate what they do. Technology can open doors, but your employees will keep customers coming back.
Chris Brown is the associate publisher of Auto Rental News and the chairman of the International Car Rental Show.