Car rental companies should be in a good mood. Heavily hit by the lockdowns, sector activity is bouncing sharply. The recovery has been there for a year. The holiday clientele is growing sharply and the business clientele offers good growth prospects. Something to smile about.
Despite everything, renters are worried. According to Mobilians, representing mobility professionals and rental companies, ” the short-term rental (LCD) sector is currently experiencing severe pressure on vehicle supplies due to the international economic context “In other words, rental companies are short on cars and find it very difficult to get new models delivered by car manufacturers. To fully understand the situation, let’s go back a little.
In 2020, to cope with the pandemic and weak customer demand, major car rental brands sold the majority of their fleet, up to half to Hertz, 31% to Avis or another 25% to Sixt and Europcar. And at the same time, rental companies have canceled many new vehicle orders. With the recovery and the sharp increase in car rental demand, rental agencies have once again opened their order book. But on the part of automakers, supply can’t keep up with demand. At issue are the shortage of electronic components, the logistical difficulties associated with confinements in Asia, or even the closure of factories of automotive subcontractors that slow down the production of new vehicles. And, just to complicate the deal a little more for rental companies, auto brands tend to favor people who offer better margins.
In this context of supply disruption, short-term rental is very much affected, even as rental companies acquire nearly 12% of car registration volumes each year. Thus, if the registrations of new cars on the entire automotive market fell by almost 34% between June 2019 and June 2022. In the same period, registrations of vehicles destined for the rental market fell by more than 51%. Additionally, lessors face rising automotive raw material costs and interest rates to finance their fleet.
So many reasons that lead the mobilians to call ” all the players in the sector, first of all the manufacturers, to immediately start a new round of discussions in order to find solutions to bring the supply of vehicles on the LCD (Short Term Rental) channel back to a level sufficient to be able to respond to demand “In the meantime, to find out if this crisis will be successful, the consequence for the customer will be paid in cash. After seeing car rental prices rise 40% since the pandemic, prices are likely to rise even more.
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