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Rental car companies need to evolve now, or they will die

There’s a scene in the movie Planes, Trains and Automobiles where Steve Martin’s character, Neal, is dropped off in the middle of a rental car lot, looking for a car that isn’t there.

By the time he returns to the rental counter he’s frustrated, annoyed and tired.

It’s a relatable moment for many of us who travel as part of our jobs, but it’s one that is becoming rarer as business travelers opt for Uber and Lyft over car rentals.

New data from Epsilon-Conversant highlights this dramatic shift in the habits of business travelers.

Data shows that from Q2 2016 to Q1 2018, 63% of car rental customers reduced their spending on rentals and 56% stopped using car rental services entirely.

And while the insights show a clear trend towards rideshare services, there are growth opportunities for both rideshare and car rental companies.

Similar to many other industries, all signs point towards the need for evolution by both traditional car rental companies and rideshare services to stay competitive.

Here are three tips to help car rental and rideshare companies alike to co-exist and grow.

Surviving and thriving

Create personalized experiences where you can

Car rental companies can only take the personalized customer experience so far.

They can’t compete with rideshare services that allow riders to select the type of car picking them up and see the name of the driver, but they can do a handful of things to make the car rental experience much more enjoyable.

Focus on the digital and counter experiences where customers spend the bulk of time engaging with your brand.

Don’t sleep on peer-to-peer ride-sharing

Peer-to-peer car services such as Drive Now, Reach Now and Getaround are popping up and pose a threat to both rideshare services and car rental companies.

Think about it: most cars spend most of their time sitting. Especially in major cities, cars might find themselves parked for days at a time unused.

Even in suburban areas, cars will sit in parking lots from 8 a.m. to 5 p.m. as people work the day away.

There are opportunities for these differing business models to converge and provide the ultimate transportation experience for a wide array of consumer preferences and needs.

Identify opportunities for investment and/or joint-mobility ventures

While this is still a couple of years out, it won’t surprise me if a rideshare company snatches up a struggling rental car company or a rental car company invests in a peer-to-peer car sharing.

Consumer preferences shift depending on where they’re headed. It’s a matter of convenience.

I’m not going to treat my trip to Dallas the same as I would New York or Chicago. Investment or partnerships provide flexibility and the ability to reach individuals where they prefer.

Important steps to take

We’ve been down this road before. Blockbuster gave way to Redbox, which is now struggling keep up with Netflix. Instagram challenged Kodak as the most recognizable photo brand.

And today, direct-to-consumer brands are challenging their traditional counterparts with rich, first-party data.

Car rental companies should not take the $3.2 billion loss to rideshare companies lightly—the time to implement change, innovate and evolve is now.

In some instances, legacy brands not only adapt, but grow and thrive during a time of industry disruption.

Others flounder and die.

If they’re to survive, car rental companies must look holistically at the transportation industry and make the necessary changes that allow them to determine their own destiny.

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