Complete Story


Rental Car Evolution Presents Service Opportunities & Can Extend Your Shop’s Car Count

Source: Brake & Front End

A quiet evolution of the rental car industry is underway with little fanfare, but it is something with which you should become familiar.

There are a growing number of privately owned rental fleets. These fleets are not big businesses, but rather small ones that are run by private individuals. You can find them with mobile apps and websites like Turo and Uber.

I want to tell you the story of one such fleet to give you a sense of how you might provide service to these groups.

During AAPEX 2017, I participated in the new Mobility Park venue performing scan tool demos. We didn’t want to use newer rental vehicles so we could provide a more realistic experience for the attendees.

Where do find older cars to rent in Las Vegas? We found a service called Turo, like Airbnb for cars, and rented an SUV that could also double as our multi-passenger taxi.

I thought I was renting some woman’s personal vehicle, but that wasn’t the case. Just before I arrived in Las Vegas, I received a message to arrange pickup of the car. A young woman picked me up at the airport in a Tesla X, and then took me to get the SUV. We proceeded to a nearby shopping mall where there was an EV charging station and she parked the car and plugged it in. The SUV I was picking up was parked there, as well as two other Tesla Xs.

On the way to pick up the SUV, I asked how her business model worked. She explained that she and some of her friends were in the entertainment business and wanted to find a less stressful job that offered them flexibility in their schedule, so they rented vehicles through Turo.

They currently owned the three Teslas, the SUV, several small electric vehicles, and had two Tesla 3s on order. They chose to own the electric vehicles for the novelty and low maintenance requirements. (Of course, it didn’t hurt that since they bought the electric cars personally they earned the Nevada and federal tax rebate that effectively lowered the already discounted sales price.)

To date, the SUV was their most popular rental because it was priced well under the local rental car rates. But, she told me they recently rented one of the Teslas for three weeks and received $10,000 for it.

The group had given quite a bit of consideration to rental rates against their monthly cost and had a positive cash flow just a few days into the month.

I was curious about repair and maintenance. This is where the opportunity exists for you.

My chauffer told me that their biggest challenge was having enough people to connect the renters with the actual vehicle. They use the free EV parking all over the strip as parking locations so a garage is not needed, but that also means that they are not doing their own maintenance.

In fact, this is where my very clever, new friend revealed a problem with their business model. Effectively they had made no allowance for vehicles to be out of service for maintenance, and, from what I could gather, had paid the price in tires big time. They never rotated the tires and were replacing the fronts at more than a 2:1 ratio for the rears. Plus, somebody had to go and wait for the tires to be changed, which meant they did not have enough drivers to pick up customers. A nice problem to have from a business point of view.

I suggested to her that they look at miles driven, something they were not doing at all, and to budget time for tire rotations and alignment checks. We discussed how often tires needed to be rotated and then discovered that it was a monthly need for them based on mileage.

I further suggested that she might want to find an independent shop that could bring a few things to the table — convenient service times, a driver to pick up and drop off vehicles back to the charging stations, occasional serious cleaning of the vehicles, and all the necessary maintenance and tire service. With the electric vehicles, it would be pretty easy to figure out a fee that is associated with monthly use or miles.

I also suggested that this new service partner could help with scheduling and should be paid as a partner, not on a per-service-item basis, because they would be providing much more than just traditional service. They would be bringing a skilled employee or two to her business to help add vehicles and accomplish that lower-stress lifestyle.

Those of you who run fleets are probably way ahead of me, but for those who don’t herein lies an opportunity to replace car count as maintenance intervals grow longer. Maybe you want to own your own fleet. Some shops are moving in that direction, too.