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How Pandemic has Changed the Car Rental Industry

Since the Covid-19 outbreak in China, cheap car rental companies have suffered major losses. Vehicle bookings have reduced while cancellations have increased. Most car rental companies in Dubai had reported 35 percent reduced bookings before March. The percentage has been rising very fast.

Most people who canceled their bookings claimed that they had chronic illnesses. Others claimed that they were traveling with their young children or babies. Pregnant mothers were also in list of those who canceled their bookings for fear of Covid-19.

However, not all cancellations were a result of the COVID 19 pandemic. Governments issued travel advisories, and airlines closed their operations. Around 13 percent of people who canceled their trips went ahead to book other places.

Cheap car rental companies in other countries have seen increased booking cancellations too. Before the outbreak in Italy, only 2-3 percent of customers had canceled their trips. The number rose to over 30 percent within a fortnight. Since February, number of people renting vehicles in Italy has been very low.

Germany is the other country that has seen a very large number of Covid-19 cases. The absence of visitors meant that the number of people hiring cars was very low.

Car Rental Initiatives

Companies have been asking most of their employees to work from home. Non-essential travel has also reduced drastically, further affecting the car rental demand. Most companies have witnessed inter-city bookings reduction, mainly due to government restrictions.

Most companies, nevertheless, are finding relief in cross-city bookings. Inter-city bookings are stable in Dubai because most people prefer renting cars. Most customers are opting for the long-term subscriptions, especially those exceeding 30 days. Long-term rentals allow people to keep vehicles for long duration.

Many companies are offering to disinfect their vehicles after each use. In the UK, Indie Campers started offering camper vans as food-delivery vehicles and ambulances. The company donated some of its vehicles to local authorities and medical NGOs in Italy.

 

Reduced Prices without Customers

Reduced vehicle demand has forced companies to look for other ways of making money. All rental car Dubai deliveries are usually planned. They also operate on a just-in-time basis.

In other words, using the cars for other businesses is nearly impossible. Some companies have chosen to de-fleet.

Unfortunately, buying vehicles is not an option for many people. In markets like Spain, France, and Italy, the number of people willing to buy used cars is low. That includes those sold at half the price is low. The same is happening in Spain.

 

Cancellation of New Vehicle Releases

Most people who rent cars choose new models and makes. That has changed, as most vehicle manufacturers have not released new car models. Ford canceled the release of its Bronco model, and other companies have done the same.

The COVID-19 pandemic has also affected the design, marketing, and testing of new arrivals. Many vehicles like the Ford Mustang Mach-E need more work before the start of mass production. Volkswagen claims that the pandemic pushed back the arrival of their GTI model.

 

Coping Strategies Rental Companies Have Adopted

The pandemic disrupted the travel industry in all parts of the globe. For that reason, car manufacturers have received many de-fleet requests from rental companies. That is after the reduced number of bookings in airports. Airports have been the primary business operators.

Due to the high spread of Covid-19, companies are witnessing reduced rentals. Here is what companies are doing to survive the pandemic.

  • They have adopted new methods of cleaning their cars after every rental. In particular, they are now paying more attention to the interior parts. They are cleaning and navigating the seats, door handles and steering wheels. Moreover, they want to ensure that their vehicles are safe to drive.
  • They are also cleaning their office facilities more often with the right products. That is helping prevent the spread of the virus.
  • They are taking many steps to ensure the safety of their employees. That includes instructing the employees to stay at home if they feel unwell. They are also asking them to be more vigilant about regular hand washing.
  • Most companies have made bookings flexible to facilitate the easier booking. They allow customers to cancel or change their rentals without any charges.
  • Many companies have launched contact free pickup, rentals, deliveries, and increased rental terms. They are already using apps to reduce the contact between their agents and customers. They also allow customers to receive the vehicle in the place of choice. The company can retrieve the vehicle from the same place after the rental.
  • Companies are pivoting away from corporate and leisure rentals. They are focusing on offering logistics and delivery services.
  • Facilitating easier rental cancellations and re-booking for their customers.
  • They are marketing long-term rentals for people postponing car purchase.
  • Tracking the trends of their bookings to manage their fleet size.
  • Targeting local travelers due to international travel curtails.
  • Changing the mindset of their customers from “inexpensive” to safe. They are, therefore, marketing various safety policies.

 

Summer Season

Rental companies might be de-fleeting for now, but the case might be different in summer. The companies might need to restock their fleet if the situation normalizes. The demand for vehicles might exceed the supply. If the number of fleet and private new car buyers increases, we might witness discounting.

We hope that the derailment will end soon, and the demand for cheap car rental will increase. Even though the timeline for that is extending, there are positive signs.

 

Conclusion

The depressed demand and car rental bankruptcies have reduced rental prices. Statistics have shown that rental rates are very low. Some companies are offering as much as 50 percent discounts and coupons.

Industry watchers predict that the demand for vehicles might pick up in summer. The number of leisure travelers is usually high in the hot summer months.

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