12 December 2022, etc.venues Monument, London
Business Travel Show Europe, presented by The BTN
21 November, London Hilton Metropole
In these leaner times both traditional rental firms and the emergent car clubs are offering ways to cut back, says Dave Richardson
This would not appear to be a great time for car rental companies. Business travel in general is slowing as recession takes hold, and the rocketing cost of fuel and concerns over the environment mean motoring is no longer the automatic choice.
Rental companies also have a new type of competitor snapping at their heels - car clubs. They may only be cheaper for rentals of a few hours, but they are starting to make an impact in cities.
Hertz's decision to launch a tariff starting at three hours proves that demand is there for short rentals. But the major car rental operators are in good spirits, as some aspects of the economic downturn work in their favour. Company car fleets are being scaled back, making rental more attractive, while CSR legislation also makes some companies turn to rental rather than allow employees to drive their own cars.
There is a greater focus on value car rental than ever. David McNeill, corporate sales director of Europcar, says: "It may be an over-used analogy, but you can still rent a car for less than the cost of hiring a suit. In the last five to 10 years prices really haven't changed that much, while service and customer expectations have increased massively.
Businesses are certainly more conscious of costs and fuel economy, but are not cutting back. Rental is seen as the quick fix solution that offers cost control with no long-term financial commitment. In the last economic downturn we found that many businesses were turning to rental precisely for these reasons."
Many companies are indeed trading down to smaller cars, often fuel-efficient diesels, but hybrid cars (with an electric motor as well as a fuel-driven engine) have proved a disappointment so far.
Their emissions are similar to the most efficient diesels, and as they cost more to manufacture, they cost more to rent. Tim Bailey, fleet director for Europcar UK Group (which also includes National and Alamo) says it is keen to see more companies insisting on smaller cars. "UK car buyers now have a choice of over 7,000 model derivatives, compared to just 4,000 at the start of the decade," he says.
"Smaller cars are now safer, more efficient and of a higher spec. However, the car is still treated as a status symbol by business renters, and selected according to the engine and vehicle size. It's time renters started to re-evaluate why they are choosing the types of car they do. Businesses should also look beyond the cost of the rental, to the overall efficiency of the car." McNeill adds: "At Europcar, we provide extensive reporting on rental fuel usage for our corporate customers.
This helps fleet managers identify where savings can be made. Certainly they should be demanding this information from their rental supplier if this isn't currently being offered." Most rental companies have tariffs designed for SMEs - such as Business Advantage by Europcar and Business Solutions by Avis. The latter includes corporate rates along with a guarantee of the best price, with a loyalty scheme that adds up to free rental vouchers. Avis UK sales director Anthony Ainsworth says: "Although small businesses are watching their cash flow more than they were 12 months ago, essential travel has not been cut from their budgets.
Many companies now want to avoid the commitment of leasing vehicles for an extended period, or the outright purchase of company cars." Budget Business Connections was introduced as an exclusive SME car rental loyalty scheme that has no contract, meaning the freedom to rent as little or often as required.
Andy Lewis, Budget's head of marketing & e-commerce for EMEA, says: "For companies that choose to cease or reduce their fleets due to higher costs, car rental may provide an attractive alternative. Businesses considering their duty of care can then be confident that their employees are using vehicles that are properly maintained and fully insured."
Although car rental is a global business heavily dependent on airports, many companies have a much more local requirement - they may not even need a car for more than a few hours. A Hertz survey found that almost two-thirds (61 per cent) of travellers would be more likely to rent a car if they didn't have to rent it for a full day, and the company has introduced the 369 tariff at over 1,200 city and airport locations in the UK and Europe. Prices for Hertz 369 in the UK start from £35 for three hours, £43 for six hours and £60 for nine hours (overnight, 9pm to 6am), with 100, 200 and 300 miles included respectively. One-way rentals are available at no extra charge.
The starting price of £35 means the new Hertz tariff will not trouble the car clubs, which typically give you access to a car for as little as 30 minutes with prices from around £4 an hour including a fuel allowance. They are aimed mainly at cost-conscious (and environment-conscious) residents of inner cities who may give up on car ownership, but they are targeting businesses, too.
Streetcar, one of the largest car clubs, was launched in 2004 and has over 30,000 members at over 600 locations in six UK cities, mainly in the south-east. Others active in the UK include WhizzGo (with a good regional spread), City Car Club and US-based Zipcar.
Once you are signed up as a member (£49.50 a year for Streetcar), you book online or by phone, go to one of many designated parking bays and unlock the car with a smart card. You then use a PIN to activate the engine, with the on-board computer keeping track of your journeys.
VW Golf diesels are the standard vehicle for Streetcar, and these cost £5.95 per hour or a maximum £49.50 for 24 hours, including 30 miles worth of free fuel per day. Short-term rates are clearly cheaper than car rental and, although the 24-hour charge is similar, whereas Streetcar includes the 30 miles of fuel, Avis, for example, charges from £48 for a 24-hour rental in central London but without fuel.
Streetcar already has over 300 business accounts, with major users including Kent County Council. Commercial manager Andrew Edgar says companies including BT, BP and HSBC have been in touch.
"We do compete with car rental even at 24 hours," says Edgar. "Delivery and collection are often a problem for car rental companies in London, where cars might well be ticketed or clamped, whereas we have our own parking bays. Companies won't give up their car rental provider, but many need more flexibility."
Car clubs could be an alternative to company car fleets, and while car rental companies feel they operate in a different market they are not entirely dismissive of the threat.
Avis's Anthony Ainsworth says: "They are competing more with public transport or taxis, but as they expand through major cities across the globe, this is an area that all rental companies have an eye on for the future."