Rental car operators gathered at a networking event in Washington, D.C., on Sept. 17, 2024, as part of the American Car Rental Association’s annual conference, where they discussed industry issues and challenges.
Photo: Martin Romjue / Bobit Business Media
If you run a car rental operation in 2025, you will need a big head — not necessarily to corral an ego but to hold together all the industry challenges that are top of mind.
The annual American Car Rental Association conference in Washington, D.C., Sept. 16-18, 2024, explored many of the challenges in the legal, legislative, and regulatory realms.
In the final article of the six-part Operator Outlook series from the 2025 Auto Rental News Fact Book, the operators answered the broad question of: What do you see as the biggest rental car industry challenges?
Bill Wallschlaeger, president of Midwestern Wheels Inc. (Avis and Budget), Appleton, Wisconsin, said one of the leading industry is a lack of pricing discipline.
Photo: Midwestern Wheels Inc.
- Rental car operators will increasingly need to monitor their numbers closely, since 75% of the business is now tied to how an operator cycles fleet acquisition and vehicle remarketing, Fathi said. “The actual rental car business is fading somewhat. He added that if you don’t know your numbers for what types of vehicles to get in specific markets and how to cycle them in and out based on calculations, you cannot survive in the car rental business. We’re seeing more operators leaving the industry.”
- Interest rates also drive up the costs of rental vehicles, he said. “If you rent cars out cheaper, and cars are more expensive, you will have a tough time financially. We call ourselves a fleet company not a rental company. That’s my business model.”
- Data ownership is emerging as a major issue that needs to be resolved, Dill said. “Who owns the data? The OEM or the owner of the car? If you finance it, does the bank own the data?”
- Maintaining disciplined fleet levels will be more of a challenge for the big three rental car companies than the independents, Dill said.
- Domestic and international independent rental car companies need more visibility and transparency with the online booking channels for the services they are selling, Dill said. Getting a customer to easily understand that they are reserving a vehicle from an offsite car rental company is extremely challenging because some channels don’t make the booking process simple and clear to customers. “They have tech for transparency but not the appetite for it.” In addition, car rental terms and conditions vary widely among independents. Customers are not made aware of what they should expect in an easy-to-read format.
Wallschlaeger added the following:
- Lack of industry pricing discipline. “We will continue to see prices drop, if operators don’t control their fleet size and match it to current customer demand.”
- Lack of availability of reasonably priced fleet.
- Consumer fraud and vehicle theft.
- Loss of the available tax incentive for equipment purchase (full expensing aka Bonus Depreciation.).
Among government regulations that make for a difficult operating environment, he cited:
- Controlling the number of days before you can report a vehicle stolen.
- Regulating the use of GPS tracking systems to track your assets (not your customers)
- Limiting the industry’s ability to collect for vehicle loss because of customer damages.
- Federal, state, local, and airport authority car rental-specific taxes and fees that do not help or support the car rental industry in some direct way.