Yahoo Autos Rental-Car Companies Handling Maintenance for Ride-Sharing Services
The future is bleak for the traditional rent-a-car business. Rental firms' stock prices have been tumbling as the industry faces competition from the thriving ride-sharing sector, where companies are investing heavily in the race for the driverless taxi. But the competition doesn't yet have the infrastructure needed to maintain their growing fleets of automated test vehicles, which still require regular service such as oil changes and tire-pressure checks. Rental companies do. So even as their stock prices slip, three of the biggest traditional car-rental firms are experimenting with a new path forward: maintenance.
For now, these partnerships are limited. In June 2017, Waymo announced that Avis would manage the routine service needs of its automated fleet, beginning with 600 Level 4 vehicles that are currently operating in the Phoenix metro area as a taxi service with Waymo test drivers behind the wheel in case human intervention is needed. "We've been able to integrate support for the autonomous fleet within our existing [rental maintenance facilities]," says Jeff Kaelin, Avis Budget Group's vice president of product development. "They've essentially become combined-use facilities where we continue to operate our existing rental and sharing models . . . and support the Waymo relationship."
Hertz entered into a similar partnership with Apple's robocar division in June 2017, but on an even smaller scale, managing just six cars initially. In June 2018, Enterprise partnered with Voyage, a newcomer in the automated-car game. That program, too, is off to a conservative start. As of December, four of Voyage's computer-driven Chrysler Pacificas were operating with Enterprise support in a retirement community near Orlando, and the company may ramp up to 12 vans eventually.
Despite their small size, these agreements provide rental firms with useful insights. "There's no doubt that the car-rental industry will be an early adopter of autonomous technology," says Brice Adamson, Enterprise's senior vice president of fleet management. "With Voyage, we hope to learn more about what kind of additional services a full-fledged autonomous fleet will need." Meanwhile, the rental companies are helping tech companies like Apple, Voyage, and Waymo as they anticipate the logistics of major expansions to their fleets (such as Waymo's recent deals to buy up to 20,000 electric vehicles from Jaguar and 62,000 minivans from FCA).
Ride sharing's future looks bright while traditional rental-car companies have a murkier path ahead. Their share of the for-hire market has shrunk from 55 percent in 2014 among North American business travelers to less than 25 percent in the first quarter of 2018, according to a recent report from Certify, a business-expense management firm. But these small-scale partnerships might help the old rental giants adapt to new consumer demands and provide support to a fledgling sector. Kaelin and Adamson both say that their companies have no plans to expand the agreements with their respective partners but wouldn't be opposed to the idea. For now, it's a tenuous tie-up between those mapping out the future of ride hailing and those who stand to be marginalized by it.
From the February 2019 issue
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