I know enough about business and the world to know that the rental car business is an unglamorous and difficult business. It’s hard to innovate for a fleet of reasons, but that doesn’t always mean one shouldn’t try or that one can’t succeed.
One of our case studies in business school illustrated the difficulties of managing a fleet of cars due to technical constraints, organizational structure and office politics, but there is no doubt much to be gained from centralized buying as well as a centralized strategy.
The buying part is obvious, without a doubt, some savings can be found by buying in bulk and using the muscle power of such larger fleets to draw savings from either standardized models or brands. But the strategy is a little harder to see. What are the benefits that would offset the organizational inertia and fifedoms present in the rental car companies? Well, when what car one rents only matters to the extent that the car runs and is off a certain category, not much. But what if people want more granularity than “compact” or “luxury”?
I think there’s a market for a company to rent specific models to their customers. Say I really want to drive a Corvette, or just feel comfortable driving the same car I have at home, it would mean a lot to be able to rent a specific car and be assured I’d get it. Perhaps I am considering buying a new car? Wouldn’t it make sense to rent one for a few days to see if I really like driving it? I think a system like this would open the door to more aspirational rentals. In fact, that market would be in addition to the current rental market as no one provides for it.
There’s understandable concerns. I think it’s safe to say that currently rental car companies don’t know until the moment you arrive (if then) what car they will have for you. That’s an inventory management issue writ large, with both technical limitations as well as customer constraints. Apparently, by the fees they charge these days, rental car companies are at the mercy of customers returning cars both early and late. Both of which wreak havoc on their inventory. And some drivers drive from on location to another, further mixing things up.
One immediate solution would be to flatten the inventory. One would use the bulk buying power to have fewer models of cars available, so you’d have less variety in your inventory to juggle. Might mean rental car companies would specialize even more by car manufacturer than they do now.
So, it may never happen, but if I could choose a company and rent a specific make and model car, I’d do it and I’d do it direct, meaning I would pass up the current cutthroat lowest price by category model, giving rental car companies a chance to make a little more premium.
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