In the past decade, the rental car industry has evolved exponentially. We have seen the rise of EVs (electric vehicles), AVs (autonomous vehicles), and consolidation and strategic alliances in the marketplace. What’s more, we have reached the inflection point where legacy systems are no longer an option, as digital transformation and MaaS (mobility-as-a-service) are taking hold in an era of hyper personalization and high customer expectations.
This was a conversation I had recently with Julie Shainock, managing director, travel, transport & logistics, Microsoft, who says, “There are these evolving customer expectations out there. They really want a more frictionless, touchless experience as they start to move forward. You come off of a long trip and you get into a line. They don’t want to do that.”
She and I talked about several large trends in this space, many of which are covered in a recent whitepaper Microsoft coauthored with Amadeus about how technology is driving the future of the rental car industry. Let’s unpack some of these trends now.
Strategic Alliances
The first trend Shainock points to is the fact many rental companies, automotive businesses, and tech companies are creating strategic alliances that are set to transform how the rental industry does business. She points to a few big ones: Uber and BMW and Hertz and Tesla, as Hertz is moving directly into using an EV fleet and is delivering education to help them drive an EV car as well.
“Sustainability is the demand today, as opposed to an afterthought. That is a key thing as we start to move forward,” Shainock says.
She says there are also many strategic alliances around software-defined vehicles and being able to deliver software-over-the-air. For example, Lynk & Co., and Ericsson are two companies that are huge in this software-defined vehicle environment.
EVs and AVs
The second large trend is the acceleration of the commercialization of both electric vehicles and autonomous vehicles. Shainock says we are going to see even more strategic alliances in this area, as one company is not going to do it all.
Looking specifically at autonomous vehicles, she points to the example of the partnership between GM and Cruise, which have entered into a long-term partnership with Microsoft with the objective to speed up the commercialization of self-driving cars.
Mobility-as-a-Service
Another big growing trend in the rental car industry is mobility-as-a-service, which Shainock describes as a super app for rental cars.
“Mobility-as-a-service really gives the consumer the ability of choice and freedom to engage in many different kinds of transportation streamlined into one single app, or a super app,” she says. “It can include ride hailing, ride sharing. It can include rental cars. It can include public transportation. You are doing all of this on one platform, and you are making a reservation as well as doing the payment option itself. That is the convenience of this whole mobility-as-a-service.”
All in all, she says it is a convenient, sustainable alternative to private cars and it is going to grow to $372 billion in 2026.
Big Data
The last area is all about big data to accelerate this journey and how consumers and businesses are going to use that data. She says Millennials and Gen Z are into instant gratification and everything is an experience for them.
“It isn’t just the rental car. It is the entire travel journey and all the different touchpoints, and they are really looking for an overall experience,” Shainock says. “They want a great experience at every single touchpoint as well.”
The challenge here, of course, is that every company involved in that touchpoint now must move off legacy systems, which we are beginning to see happen.
Shainock suggests starting with the data. “Data is the fundamental, basic premise in order to draw all the different insights and analysis.”
Looking to the future, she says we will see a shared data-driven ecosystem of mobility services across the entire travel vertical with many different touchpoints along that journey.
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