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Who is the Local Operator of the Future?

In an autonomous vehicle environment, the business model will change, but fleet management will be more important than it is today.

January 24, 2017, by - Also by this author

The future as we perceived it five years ago is different than the future we see today, which appears to be more, well, disruptive.

Within the past five years, we’ve seen the explosion of ride hailing, major resources devoted to autonomous vehicle development, and auto manufacturers becoming service providers by launching their own mobility programs. Keeping up with this fast-moving stream isn’t easy, particularly if you readily can’t identify your place in this future.

In speaking with car rental operators — particularly those running franchises or their own independent companies — many have taken on a fatalistic attitude when it comes to the future of their business. The attitude seems to be, “We’re doomed,” or “I won’t be around to witness it anyway.”

Those with that attitude probably won’t. A future in which cars drive themselves is certainly difficult to wrap our heads around, but right now we can at least put a few things in context.

First, there will still be service providers in this future, and someone will need to manage those vehicles. But who will that be?

While automakers are now testing the waters as mobility providers, do they want to take on this operations responsibility on a massive scale? Would car dealerships? As pervasive as Uber and Lyft have become, their present model depends on drivers using personal vehicles. When we stop driving, outright ownership will decline. That means Uber and Lyft will have to become fleet owners. Do they want that burden, or would they prefer to contract with those skilled at managing fleets?

Car rental companies know fleet management. It’s not as sexy as an iPhone app, but it’s more important. Car rental is poised to leverage this fleet management for the future.

The business model will change, however, and it’s easy to see how this could drive a fatalistic attitude. How people access vehicles will change. How they’re bought and sold will change. How vehicles are serviced will change. In an autonomous vehicle environment, it looks like vehicle ownership could eventually give way to a pay-as-you-go scheme, in which case there will be an even greater pool of vehicles to manage. In fact, fleet management will be more important than today.

Would smaller operators have a place in this future?

In a world of autonomous vehicles, there will still be the need for service providers that understand their local markets, ones that can assume the burden of operations and profit margins in ways a larger corporation may not want to be involved. This model would still be relevant in the future.

For the smaller operator, the same challenges will remain. Technology’s role will only increase, so it’s time for the technophobes to get some therapy. But you don’t have to invent the technology nor do you need to be a first adopter. Sure, how best to harness technology could keep you up at night. But think how technology has already allowed you to act like a bigger company — by implementing sophisticated customer relationship and database management systems, automated phone answering services, or slick web design. Technology may start expensive, but it inevitably becomes attainable as it develops.
Heck, 20 years ago you may have been scared about keeping up with the internet. If you’re still here, you’ve managed to stay on top of the changes and incorporate them into your business.

Just like today, small operators won’t win on price. The larger brands will always be able to buy vehicles cheaper than you can — and therefore distribute them to end users cheaper. That won’t change, so you’ll still have to look for the same advantages that you need to survive today by looking for the added value you can provide.

For smaller car rental operators, success has always been a function of exploiting a niche and making yourself indispensable to your customers. That won’t change. Earn your customers’ trust, and they’ll follow you into the future.

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Author Bio

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Chris Brown

Executive Editor

Chris is the executive editor of Business Fleet Magazine and Auto Rental News. He covers all aspects of the fleet world.

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