Traditional car rental companies are feeling the heat from Auto share and like competitors. The competition offers flexibility and convenience. Rent for several hours instead of a day. Cheaper right?
Profitability is constrained by economic activity. Economy goes up auto rental goes up and the reverse is also true. Have the traditional auto rental companies reached the limits of their growth.
Auto rental is a capital intensive business. Utilization is key. Unlike financial institutions who can electronically move capital anywhere globally Auto Rental companies must physically move assets and hope for the best. Rentals are subject to seasonality and time of week concerns. Rent a car for weekend and many locations are sold out. Rent a car on a Tuesday sure no problem. However the capital costs are the same day in day out.
Auto renters are locked into the internal combustion model. As more electric and hybrid cars appear will they transition well into the new product line.
George Gutowski writes from a caveat emptor perspective.