Advocating sharing rather than ownership: the idea does not come from a political leaflet, as you might think, but from a profession - the car rental industry - which is seeking to get back on track by identifying new sources of growth. The market has been through a few dark years, and business customers are no strangers to these difficulties. Faced with the crisis, companies have tightened their budgets for business travel, and therefore for short-term hire (STL). "The first item to be affected when the economy slows down is generally business travel. And as car hire is at the end of the travel chain, it is in fact the first item to be cut."says Alexandre de Navailles, Managing Director of Hertz France.
Today, however, the sector is gradually recovering, benefiting in particular from the new relationship that more and more motorists have with their vehicles. Ownership, which has long been sacrosanct, is no longer seen as an end in itself. The practical and financial constraints associated with it have encouraged a growing number of drivers to turn to new alternatives. A paradigm shift that traditional hire companies are taking full advantage of. The figures bear this out: in its study published last April at the annual conference of the Conseil national des professionnels de l'automobile (CNPA), GMV Conseil highlighted this strong trend. Between 2012 and 2014, the volume of rentals increased by 10 %, to pass the 20 million mark on the French market alone. Over the same period, the number of renters rose from 6.2 to 7.5 million. This bodes well for rental companies...
However, behind these very encouraging figures lie some important nuances. The first concerns the behaviour of business customers. Unlike the leisure segment, which accounted for 51 % of private vehicle rentals in 2014, compared with 45 % in 2013, the business share remains relatively stable at 31 %. "We're still struggling a bit, because the corporate market is stagnating, says Sylvie Roland, Sales Director at Enterprise Rent A Car. The leisure segment has developed well, but on the business side, things are only picking up very slowly... Especially as the pie is shrinking. There are more players looking to share it, notably more and more low-cost operators. So prices are tending to fall."
This growth in the range should not stop there, since Enterprise has recently regained control of its National and Alamo brands on the Old Continent. These brands, positioned respectively in the premium and leisure segments, were previously operated as master franchises by Europcar. While the Group's strategy for their deployment has yet to be defined, there is every reason to believe that the American giant intends to increase its share of the market.
New rental model
The other nuance concerns the alternatives available, since the GMV figures include new forms of mobility alongside 'traditional' rental. Indeed, the rise of car-sharing is making a significant contribution to the growth of the sector, even though not all rental companies have yet embraced the phenomenon. This new rental model, which accounted for just 5 % of the market in 2012, has now reached 8 %, and even 23 % among residents of Ile-de-France.
Four years after its launch in Paris, the Autolib effect is still felt, even if the car-sharing service is no longer the only player in the market. For better or worse, car hire companies have adapted to changes in the market. The most obvious example is undoubtedly the acquisition less than two years ago by the Avis group of Zipcar, one of the pioneers of mobility. This car-sharing service made its debut in Paris in September 2014 and was recently enhanced with the Zipcar Pro package, specially dedicated to businesses. Avis, a giant in 'traditional' car hire, was thus showing a salutary pragmatism, by adding a new string to its bow rather than enduring increasingly head-on competition.
But it is not the only one to have decided to embrace car-sharing rather than fight it: back in 2009, Hertz led the way with the launch of Connect by Hertz, which later became Hertz on demand and finally Hertz 24/7. As for Europcar, the acquisition of Ubeeqo at the beginning of the year confirmed the appeal of car-sharing among rental companies, with Europcar focusing this time on the business segment. "This operation is part of Europcar's strategy to broaden its mobility offering to meet the needs of its customers, with simple, turnkey solutions."explains Didier Fénix, Managing Director France and Belgium, who warns: "This acquisition in no way signals the decline of traditional rental.". For their part, Germany's Sixt and America's Enterprise, the two up-and-coming challengers in the French car rental landscape, should not be long in exporting their car-sharing solutions, which are already available in their domestic markets. Sixt, which launched DriveNow in London at the end of 2014, is considering a launch in France as early as 2015.
The market is evolving rapidly, and is therefore full of opportunities for the traditional players. At least, that's how Alexandre de Navailles from Hertz feels: "Seven years ago, car rental penetration of the French driving age population was between 6 % and 7 %. It has doubled since then, which is very encouraging. But, at the same time, this means that 85 % of the population have not hired a car in the last twelve months. Half of French people have never even hired a car in their lives. Many drivers still own their vehicles, compared with other countries, which opens up enormous opportunities for us. And there's room for everyone!"
Covering all countries
There is certainly room for everyone, but only if the right growth drivers are activated... In this respect, the fundamentals remain unchanged, particularly in the corporate segment. Whether in France or abroad, strengthening the network remains the leitmotiv of all the players involved in supporting business travellers on their journeys. "In 2011, we were present in just three countries in Europe, says Sylvie Roland at Enterprise. We now cover the whole of the Old Continent and the Middle East, as well as a large part of Latin America and many countries in the Asia-Pacific region. We have also recently opened in Australia and New Zealand."In addition, with billing and reporting tools playing a crucial role in winning over businesses, leasing companies are also stepping up their efforts to provide their customers with sufficiently accurate data to enable them to effectively manage their expenditure. "We have developed online tools that can be customised and adapted to our customers' travel policies, such as europcar.biz, presents Didier Fénix at Europcar. This BtoB booking site, designed for our key account customers and SMEs, allows us to set up a hierarchy of access rights, as well as providing reports and electronic invoicing."
Green fleet
At the same time, product quality remains essential for the end user, the business traveller. The average age of the fleet and the variety of the range on offer are therefore arguments put forward by the sector's heavyweights to make the difference in the face of competition from low-cost hire companies, or even private hire. Hire companies are also focusing on vehicles that pollute less. Hybrid vehicles are on the up, and their weighting in catalogues is increasing all the time. These efforts have also prompted the Conseil national des professionnels de l'automobile to ask the authorities for an exemption for rental vehicles during periods of alternating traffic. So far without success. On the other hand, after having - cautiously - embarked on the electric adventure, most hire companies have put their green ambitions on hold and sent their vehicles back home, for lack of infrastructure and therefore users.
Service, and in particular the fluidity of the customer experience, is now the other major priority for car rental companies. They are all seeking to keep waiting times for customers, especially frequent business travellers, to a minimum. Europcar's CarChoice service, which provides direct access to the rental vehicle without having to go to the counter, is a step in this direction. This service is already available at several airports, including Lyon Saint-Exupéry, Nice, Toulouse Blagnac and Paris-Orly.
The development of loyalty programmes is also part of this logic. Hertz recently introduced its Full Gold service at Paris Orly airport, which also provides direct access to the vehicle. As for Avis' Preferred programme, over the coming months the rental company intends to focus on equipping its agents with tablets so that they can serve their customers while they are waiting in line. "I believe in the marriage between our technology, our network, our partnerships and our service.says Annika Gummesson, Marketing Director, France and Benelux, Avis Budget Group. Our teams are key to satisfying our customers. And we want to treat every one of them like a VIP."
On-board Wi-Fi
Avis stands out for its technological innovations, as demonstrated in spring 2014 by the integration of Wi-Fi in its vehicles via a box that users can even take with them, in their hotel room for example. The service, available in a dozen European countries, avoids the often prohibitive roaming charges abroad. It should be noted, however, that a similar approach has already been taken by Hertz, with the Mobile Wi-Fi Hotspot.
Finally, personalising the service could well be the next step: "We are working on pilot programmes, says Annika Gummesson. If the passenger agrees to share certain information, we can, for example, programme their favourite song for when they arrive in the vehicle, and perhaps reduce the stress associated with their journey."In fact, according to a study published last spring by Ford, driving to work is ultimately more stressful than working itself. So these efforts at personalisation are opening up great prospects, particularly in the age of Big Data, and could well radically change the rental experience in the future.
Not just price
And what if, despite all these "little touches", the crux of the matter was still price? Low-cost offers are gaining ground, even among the traditional players who aim to cover all segments of demand, from top-of-the-range to "value brands". Opinions differ as to the importance of the price factor in the Business segment: "Yesterday, today and in five years' time, price will always be a very important factor in invitations to tender."warns Didier Fénix at Europcar. "Of course, the price will always make the difference for buyers on the market.says Sylvie Roland at Enterprise. Nevertheless, more and more invitations to tender include detailed questionnaires on sustainable development, our improvement processes, etc. Customers want to understand how a leasing company works, whereas for a long time they were only asking for the price and sales conditions.". At Hertz, price pressure alone is no longer enough to capture the market: "Finally, price is almost the last criterion of choice todaydares Alexandre de Navailles. This is of course an essential variable for buyers, but all the major players in the market are capable of charging relatively similar prices. So the difference lies elsewhere".
At the CNPA's annual meeting, the chairman of the board, André Gallin, had no hesitation in referring to "a highly competitive market, a knife-edge battle"This confirms, if confirmation were needed, that the situation in the sector is still tense. However, optimism still seems to be the order of the day, among both the 'historic' car hire companies and their challengers. The new possibilities offered by current and future technological advances should help to usher in a new era in car hire, allowing, for example, access to the vehicle via a smartphone or a connected watch. "I think that, in time, the technology used for car-sharing will complement our Full Gold service, allowing customers to access the vehicle via an access code."warns Alexandre de Navailles at Hertz.
For its part, Europcar has created a dedicated entity, the "Europcar Lab", designed to promote innovation and improve customer mobility. Didier Fénix refers to "tools geared more towards new technologies, to be unveiled shortly". But these new opportunities are also attracting more and more competitors, and not the least: since April, Audi has been experimenting in San Francisco with the Audi on demand service, enabling people to hire one of the German brand's models and access it simply from the dedicated application, with the vehicle even being dropped off at the desired address by a concierge service. The future of car hire is here.
Car-sharing finds its way
Car-sharing is one of the symbols of collaborative consumption, along with car-sharing and private car hire. This mobility solution is increasingly appealing to the business world, with the number of companies offering this service to their employees set to rise from 200 to 4,000 by 2020 in Europe, according to a Frost & Sullivan study. With this in mind, car hire companies are getting organised. After launching its on-demand service in 2011, Avis is starting to roll out Zipcar, the car-sharing specialist it acquired in early 2013. Present in the United States, Canada and Europe, notably in London and Vienna, Zipcar made its appearance in the French capital in 2014 and now has 70 stations in Paris and La Défense. A recent partner of the SNCF, the world's leading car-sharing company will soon be opening stations in France's 25 main stations.
To use the service, which can be accessed using a Zipcar card, you need to take out a subscription (€50 per year and €4.50 per hour for the Zipcar Pro package), then book online or via the mobile app (€6 to €7 per hour, including 80 km). Zipcar is also present in Spain, in Barcelona and Madrid, operating under the local Avancar brand. For its part, Hertz has developed its Hertz 24/7 offer in 60 stations in France. This service costs from €7 an hour or €70 a day (including 100 km). Europcar, for its part, offers an hourly service, with rentals from a minimum of 1 hour to a maximum of 8 hours. With 150 km and insurance included, prices depend on the category of vehicle, with each additional hour charged at €7.50. But car-sharing in France really came into its own at the end of 2011 with Autolib', launched by the City of Paris and Bolloré. Companies of all sizes can sign up several of their employees, with packages ranging from €280 per month for 25 hours' use to €19,500 for 2,000 hours.
The nomadic executive can set off at the wheel of one of the 2,500 electric Bluecars available from the 875 stations in the Paris region, then return the vehicle to any other station. Buoyed by its success in Paris, the Bolloré group has now set out to conquer Greater Lyon, where the vehicle has been given the name Bluely, followed by Bordeaux with the Bluecub. All of which adds up to further progress in car-sharing in France. In Paris, Zipcar is targeting rental periods of over 30 minutes, so as not to clash with Autolib. This longer period is due to the fact that the driver will have to return the vehicle to the point of departure. The fleet is also different, with nine different types of vehicle, compared with Autolib's single electric car from Bolloré.
