The car rental industry remains fiercely competitive and with the introduction of a number of technological advancements and modern commercial propositions, the industry is taking steps to future-proof itself. Although these challenges have made trading conditions rather tumultuous, the industry has performed relatively well. That’s the view of Martin Lydall, Europcar’s Chief Commercial Officer in South Africa.
Q: What are the industry’s greatest challenges?
A: There are a number of challenges which have been on the agenda for some time. Two particular challenges that have the largest impact – low price increases in relation to cost increases and the increasing levels of accidents. With stagnating prices and increased claim volumes, car rental companies are finding it more and more difficult to generate sustainable returns.
Q: What are your thoughts on car rental rates in South Africa?
A: With the industry being extremely competitive, there is an ongoing trend where pricing stabilises over a very short period of time but returns rapidly to low levels. Yielding strategies vary per business which creates a complex pricing environment. The rate discussion is further complicated by varying availability levels, fleet and customer mix differences. These factors create an environment where there are clear price-setting leaders and followers in the market. Nevertheless, customers get great value for car rental in South Africa.
Q: What is Europcar doing to remain relevant to the modern-day car rental customer?
A: Europcar is investing heavily in a number of technological and process-based enhancements which are designed purely for the benefit of the customer. Traditional car rental processes and systems are considered cumbersome and transactionally-focused rather than customer-centric. The move away from the legacy-based way of operating has been, and continues to be, one of Europcar’s key strategic drivers.
Q: What impact has Uber had on your business in the last two years?
A: Uber remains a symbiotic transportation alternative to the car rental industry. Uber’s technology platform and ease of use have offered car rental businesses insight into how customers adopt customer-centric services. Although there are areas where we can be seen as competing companies, our service offering is complimentary. Uber competes well on shorter rentals or single trips. Where customers require longer term rentals, or to cover larger distances, car rental is still an attractive option for customers and offers more autonomy for our customers. We believe that there will always be a space to provide cost-effective short to medium-term transport solutions.
Q: Which was your most popular class of car with corporate travellers in 2017, and why do you think this was so?
A: The Group B category has, for a number of years, been the primary vehicle selected by corporate customers. For short visits, these vehicles are safe, comfortable, easy to drive, easy to park and offer suitable space for luggage requirements. The cost benefit of renting a Group B offers procurement officers excellent value for money.
Q: How much of a demand are you seeing for in-car wi-fi?
A: This product is seeing excellent take-up, primarily through the inbound market. The product offers international visitors cheaper alternatives to roaming charges from their home networks and affordable connection rates for domestic customers travelling for both business and leisure.
Q: How is Europcar using Big Data to its advantage?
A: Europcar has various analysis protocols which integrate into both intelligence and transactional systems. These protocols make use of various data trends such as buying behaviour, preferences, decision making, customer service levels, demand forecasting, macro-economic factors, vehicle telematics data and internal capabilities. Making use of a combination of these factors allows for clear decision making and process enhancements to achieve customer centricity and to optimise the operating model. Europcar utilises Big Data to tailor offers to customer’s likes, preferences and needs.
Q: Are there any trends in the industry, globally, that have caught your eye?
A: There is a definite trend to augment car rental services with car sharing and on-demand car usage services and tools. Global acquisitions by the various franchise holders indicates that this is a key area of focus in major cities around the world.
Q: How far do you think we are away from autonomous driving?
A: If one were to look at major American and European cities, it would seem this is something that is imminent. In South Africa, we are probably eight to 10 years away from seeing this commercialised and in some form of public use. Elements such as legislation, cost of technology and technological access to the vehicle’s on-board computer system are barriers for the trend to take hold in South Africa. Once the majority of vehicle manufacturers begin to install these points of access to on-board computer systems and governments implement legislation for self-driving vehicles, the adoption and implementation rates will increase significantly.