What the Future Holds for Car Rental Companies

The spread of COVID-19 has prevented travel across the globe. Forgone are the summer road trips or European adventures. No need to find a new suitcase or make a list of necessities for your next trip. Spring break seems like a dream, and now, the future of travel is truly unknown. The question of safety will remain a widespread concern for the next year (or longer), so what does that mean for travel enthusiasts and the companies they rely on?

With the urge to stay inside more prevalent than ever, the demand for car rental companies has nearly diminished. Many established brands, like Enterprise and Hertz, are battling an unforeseen decline – and fast. With travel bans in place and a growing awareness of germs, car rental companies must prepare for a challenging road ahead. With much speculation over reopening the economy, travelers must face the hard truth: travel at your own risk. 

The following will detail how car rental companies plan to adapt to the current setbacks they face – including their symbiotic relationship with car manufacturers and airline travel. 

It’s time to enterprise

With operations close to a standstill, Enterprise Holdings has taken the quick initiative to combat their recent loss in sales. In order to gain customers’ trust, Enterprise Holdings has launched a new cleaning campaign with a strengthened commitment to safety. By upholding strict cleaning standards and implementing employee protocols, Enterprise Holdings is taking a fast-action approach to show their care and concern for customer and employee well-being.   

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When you’re ready to travel, we want you to feel confident and safe. Enterprise’s Complete Clean Pledge is our commitment to industry-leading procedures to clean and sanitize with a disinfectant every vehicle, with careful attention to 20-plus high-touch areas. Visit Enterprise.com to learn more. . . . #EnterpriseRentACar #Enterprise #CompleteCleanPledge #RentalCar #Travel #Transportation

A post shared by Enterprise (@enterprise) on May 11, 2020 at 9:22am PDT

The decision to launch the Complete Clean Pledge will benefit all car rental companies that fall under Enterprise Holdings, including Enterprise Rent-A-Car, National Car Rental, and Alamo Rent A Car. These car rental companies must embrace the restrictions of the cleaning campaign as a new normal to their operations – with the hope that an advertised commitment will attract customers once travel restrictions have eased. 

It hertz

While most car rental companies are enduring the pitfalls of COVID-19, Hertz Global Holding Inc. finds itself in the hot seat among its competitors. With heavy debt and poor financial health, Hertz is facing a tough year ahead. Recent financial reports suggest Hertz is quickly pivoting towards bankruptcy – which could leave a surplus of used cars in a market with little demand. 

With a decline in share value and an exuberant loss in the first quarter, it is evident the pandemic has taken its toll. Due to their economic state, Hertz has made the decision to cancel new car purchases in 2020 to focus on its current liquidity. Even with impending financial stress, Hertz continues to offer rides to healthcare workers and free, one week rentals through their #hertzroadtrip promotion. 

WIN a free one-week rental to use when you’re able to go on your next adventure!
Share your favorite road trip using #hertzroadtrip & 10
winners will be chosen weekly.*

* NO PURCHASE NECESSARY. Void where prohibited. 48 US, 20+. Ends 7/9/20. For rules: https://t.co/fphBciB4vG pic.twitter.com/D9HmXaPnT9

— Hertz (@Hertz) May 8, 2020

Symbiotic relationship

The quick decline in domestic and international travel generated a speedy response from our government to help aid the airline industry. This aid is crucial to the vitality of airline operations, but where does that leave the future of car rental companies? Car rental companies rely on consistent air travel to keep their businesses afloat. The foot traffic in airports and the convenience of car rental booths create a win-win situation for travelers and these transportation businesses. 

It is hard to say whether all car rental companies will survive the financial heat of COVID-19. The symbiotic relationship between car manufacturers and car rental companies will likely suffer as well. With the demand for car rentals down until further notice, it is probable that other car rental companies will decrease their purchasing of new vehicles this year – resulting in a loss of sales for car manufacturers.  

Consumer insight   

Thanks to a fast response, U.S. automakers are doing their part to help fight COVID-19. As Americans await a safer environment, the economy has reached a state of frenzy. All businesses have been impacted by this deadly virus in some way – whether it’s a loss of sales or furloughing employees. It has changed the way we plan for the future. The problem for these car rental companies is the current mindset of their consumers. Customers are no longer thinking of their next spring break destination or planning ahead for a family wedding. Who knows if either of those events will happen.

Key to the future 

With a second outbreak expected in the fall, it’s impossible to decipher how long these car rental companies will suffer. Whether the commitment to cleaning and disinfecting your rental car will attract future sales is unknown. As travel bans begin to lift and the economy welcomes a new sense of normal, Enterprise and Hertz will continue to feel the impact of COVID-19. As we continue to pave the way towards a safe and optimistic future, we can only hope that traveling becomes a more frequent activity among all – resulting in the long-term survival of these established car rental brands.