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Get Your CX Geared Up for Another Busy Summer of Car Rentals

January 19, 2023

Travel is back, and this summer, much of it will be within the U.S. Even with higher gas prices, over 206 million Americans are planning to take to the road in a car or SUV rental. This may seem like a boon for car rental companies as rates have increased over 50% since 2019. But with a looming recession, travelers may start to reassess their need for a rental car. At the very least, they may ask themselves, "is it worth the higher price?” The only way to guarantee survival, or better yet, success, is to ensure that you’re ready to offer your rental customers a 5-star experience.  

What to Expect this Summer in the Car Rental Market 

There’s no doubt that the pandemic devastated the car rental industry. Due to lockdowns, there was a dramatic drop in demand. In 2020, industry revenues fell by almost 30% compared to 2019. As travel bans continued, things only got worse, when Hertz, one of the largest U.S. car rental companies, lost much of its revenue, falling $17 billion into debt. After it fell into insolvency, the company had to lay off 10,000 of its North American employees and dispose of its non-essential assets, which allowed the organization to eventually pull itself out of bankruptcy.

But as restrictions eased, travel rebounded, and much faster than expected. By 2022, there was already a 42% surge in leisure summer travel, and recent surveys show that over 90% of Americans are planning some form of travel in 2023. Much of that will be domestic, within the U.S., and over half of travelers want to explore state and national parks, historical sites, or take part in outdoor activities, which means a sizable portion will be seeking rental cars, RVs, and SUVs while vacationing between states.  

High airfares and long airport waits have even caused some to prefer driving rather than flying. When asked about their travel transportation preference, a recent Wells Fargo report cited that 66% of travelers prefer a road trip over flying to their destination, and one of the latest customer surveys shows that nearly 80% of Americans are planning some form of road trip this year.  

They will also likely be booking early or making reservations, after the shortage of cars that plagued last summer’s travel season. How early? That may be anyone’s guess. Some people book as far in advance as 90 days before their trip, just to guarantee an available car.  

Industry Challenges Still Persist into 2023 

While high demand is good, the industry has been challenged by the sudden resurgence in road travel. To survive the lean years of the pandemic, many rental companies were forced to sell off large parts of their vehicle inventory. Unfortunately, chip shortages led to fewer cars being produced, which resulted in a 62% decline in new vehicle registrations among rental companies, especially in the economy and mid-size ranges that make up a substantial part of their fleets. That meant that many companies couldn’t replenish their stock, and there were fewer cars available to rent. 

Sadly, according to our industry experts, this situation is likely to persist into 2023. “Although rental companies have started adding more vehicles,” explains Jermaine Gordon, itel’s Operations Supervisor for a U.S. car rental client, “they still do not have as many cars as they did pre-COVID. That’s why, with increased travel, and demand not quite meeting supply, we can still expect some challenges in the summer months.” 

There is also no way to fully predict how higher gas prices, and a possible recession, might also affect the U.S. market. With inflation making everything more expensive, from meals to hotels and attractions, many Americans are rethinking their travel plans this year. Last summer already saw a 31% decrease in road trips, directly attributed to the cost of gas. However, with gas prices easing over the fall/winter, numbers have rebounded somewhat.  

“This is where a focus on customer experience could make rental car shortages, and higher gas prices, a bit more palatable to customers,” explains Jermaine Gordon, “if they know that they’re getting a level of service above the rest. That’s why we aim to make every customer interaction both personalized and memorable, and our agents go above and beyond to find our customers the best available rental option.” 

What This Could Mean as Companies Prepare for Summer’s Peak 

There is another possible threat to the car rental industry, as non-traditional, app-based startups have entered the field. Some offer a completely automated, contactless experience, something that many consumers came to prefer during the pandemic. Liigu, for instance, allows renters to self-manage their experience directly through their smartphones, and car sharing apps like Turo have become popular with those wishing to skip the car rental counter.  

This means that excellent customer service, and superior customer experience (CX), may be the only way for legacy brands to remain competitive and to differentiate themselves in the market. Especially when rental rates have in some cases doubled since 2020, while customer satisfaction scores have consistently declined, according to J.D. Power, dropping 11 points throughout 2021-2022

Though rental demand is still high now, if a recession hits, customers’ tolerance for soaring prices may dwindle. It’s difficult to compete on price if digital startups and car sharing services can offer cheaper pricing because of their lower overhead costs. The way that traditional companies can avoid losing out is to lean more heavily on their customer support channels that provide a depth and richness of service that a self-service app cannot provide.  

Live agents can offer intangible benefits that endear your brand to customers, such as travel tips, or directions to nearby attractions. As younger consumers show interest in new car rental options, such as luxury models, self-driving, or electric vehicles (EVs), they may also appreciate recommendations from a friendly customer support agent. 

There will always be a place for self-service kiosks and online booking, for those who prefer convenience above all. “However, phone agents offer people a more personalized approach and that important interaction with a live person,” says itel’s Jermaine Gordon, “as opposed to an app that doesn’t offer that same human touch.”  

How We Can Help 

It’s also important to make sure you have enough support agents to handle the summer rush, with the flexibility to ramp up operations when calling peaks suddenly hit. itel can not only ramp as much as you need in as little as 60-90 days, but we can also offer your rental customers a five-star experience, with bilingual omnichannel options in Spanish, one of the top requested support languages in the U.S. We have extensive experience serving clients in the car rental market, and know how to deliver on-brand, world-class service via a cost-effective CX model, with customer satisfaction scores often exceeding 88%.  

Ready to gear up for summer with CX that will help your business grow? Contact our team to get started. 


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