A new year, a fresh start — it’s time to make a few predictions for the car rental market for the coming year. Let’s reconvene at this time in 2012 and see what actually came to pass.

Dealers hold the cards (and cars).
Manufacturers will continue to curtail rental fleet supply as part of their “protect the residuals” philosophy. What they do sell will stay pricey. Cars are made to order out of the factory these days, and most of it is going straight to the dealers for retail.

The pipeline from Hyundai is shrinking; their public statements are being backed up on the ground. But check with dealers of Japanese products, who may get flooded with cars — no pun intended — as production returns to full strength. The prices won’t be triple net; after all, they’re dealers. But, they may have some inventory for you.

Used car market prices will hold up.
We’re clear of the tsunami effect, but the other factors affecting the wholesale market are still in place. The plunge in lease volumes during the recession are hitting the used car market now and manufacturers are restricting production and keeping inventories low. Dollar Thrifty is pegging a Manheim Index in the low 120s for 2012. That’s a healthy number that will help holding costs.

Car sharing will grow, but in “untraditional” markets.
There will be incremental growth in car sharing’s core markets — city centers and college campuses — but car sharing’s real power and potential lies in its technology, which will automate and decentralize the traditional rental process. Think corporate campus rentals, airport-to-city center shuttles and commuter possibilities.

Daimler’s car2go “one-way rental” scheme could be a game changer. Programs such as Avis’s virtual car and On Location initiatives will begin to make waves in 2012.

Peer-to-peer rentals, while gaining a lot of media attention, will stay small. Let’s see what happens when an accident or injury tests those new insurance laws.

Independents make inroads.
The majors’ rightsizing has left room for others to fill remaining demand, and the concentration of power with four companies (perhaps soon three) has fostered the need for alternatives.

 The FTC wants a viable Advantage Rent A Car for competition’s sake, and online portals such as Expedia — hedging the consolidated power of the majors — are eager to keep independents around as viable alternatives as well. Ace is finding success in direct sales to corporates, and the J.D. Power award doesn’t hurt. Fox’s Florida expansion will shift the dynamics of discount leisure rentals there. Sixt is in stealth mode; they have the financing to grow if and when they want to.

Consolidated rental facilities have leveled the playing field for those smaller companies luckily enough to be on airport. Independent car rental is alive and well.

Rates will be flat to up slightly for 2012.
This is complicated. Leisure rates are healthy, but competition for the corporate traveler is as fierce as ever. Rates for the premium brands will hold or increase slightly, though growing competition between the discount brands will keep their rates in check.

The discount brands are facing new competition: Premium brands manage utilization through opaque sites such as Hotwire and Priceline. Discount brands not affiliated with the opaques will have to fight this loss of budget-oriented business that would normally be theirs. Count on rate volatility. According to one rate management company, the number of times a rate for a given date changes in the 30 days prior to the rental date is up nearly 21% over last year in major U.S. markets.

But here’s the silver lining on rates: Part of this pricing pressure comes from strategy, as RACs continue to grow local market bookings. These transactions come with increased lengths of rental, and thus lower rates, along with an even lower cost structure.

Hertz will announce a new offer for Dollar Thrifty.
Letting their self-imposed deadlines lapse in the third quarter of 2011 did not kill a Hertz deal for Dollar Thrifty. That deal was based on market conditions that no longer exist and it was a tender offer, a hostile transaction that circumvented Dollar Thrifty management.

Hertz is still working with the FTC on a remedy package for a Dollar Thrifty bid. Might a buyer for Advantage Rent A Car be announced soon? Expect a new offer in 2012, one that includes the Dollar Thrifty board in the negotiations. 


Chris Brown
Chris Brown

Digital Editor of Automotive Fleet, Fleet Forward, Auto Rental News

As editor of Automotive Fleet (digital), Auto Rental News, Fleet Forward, and Business Fleet, Chris Brown covers all aspects of fleets, transportation, and mobility.

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As editor of Automotive Fleet (digital), Auto Rental News, Fleet Forward, and Business Fleet, Chris Brown covers all aspects of fleets, transportation, and mobility.

View Bio