Challenging times call for innovation
A N UNCERTAIN macropolitical future, a
shrinking economy and
declining international and
domestic tourism numbers
are resulting in cut-throat
conditions, as car-rental
companies jostle for market
share in a stagnating industry.
“There is no volume growth
in all the measured segments:
corporate, government,
international and local leisure,
and insurance replacement,”
says Avis Budget Rent-a-Car
Sales Executive, Lance Smith.
The Southern African
Vehicle Rental and Leasing
Association (Savrala) statistics
show zero percent revenue
growth in the SA car-rental
industry between January
and September 2018. Rental
days declined by 2% and fleet
growth by 3,1% over the same
period. Meanwhile, Statistics
SA reports a 0,6% drop in
total tourist numbers and
4,9% lower overseas tourist
volumes in February 2019
compared with February 2018.
Domestic trips declined by
14,9% between April and June
2018, according to Stats SA’s
Q2 2018 report.
Hertz Southern Africa gm
International Sales, Hans
Manke, says the industry
faces more than 10% annual
increases on new vehicle
prices; average inflation
of more than 6%; and a
currency decline of more than
20% during the past year,
which is putting pressure
on costs. Domestic Sales
Southern Africa gm, Fiona
Angelico, explains: “There
is an expectation from our
customers to retain our costs
in line with the CPI. The
exchange rate impacts on the
costs of vehicles and parts,
making it difficult to meet
these expectations. Rising
fuel costs put a strain on
forecast budgets.” She says
the company is also unable to
recoup losses resulting from
stolen and damaged vehicles.
Bidvest Car Rental sales
& marketing executive,
Gaynor von Loggenburg,
says the market is expected
to continue to contract,
with a change in sales mix
due to “down-buying” in the
corporate sector. She says
this is resulting in aggressive
pricing as competitors try to
secure volume in a declining
market. “In addition, Brexit
is creating uncertainty and
impacting the inbound sector,
which historically produced
high growth for tourism out of
Europe.”
Thrifty Car Rental sales
director, Leslie Matthews,
says, as consumers are hard
pressed for cash, the company
is struggling to collect
outstanding debt, especially
when it comes to liability
responsibility when there
have been accidents. “It’s a
grudge payment and there
are more pressing issues that
need consumers’ hard-earned
money,” he says.
“It is not easy to be
optimistic about the shortterm future of the SA
economy,” agrees Melissa
Nortje, First Car Rental
executive head: Strategy,
Development & Marketing.
“Also, the Administrative
Adjudication of Road Traffic
Offences Act (AARTO) and
its demerit system, once it
is implemented, will force
car-rental companies into
financial, procedural and
operational disarray once
again, with no consideration
for any major transportation
and fleet entities’
environments.”
Not all doom and gloom
However, it’s not all doom and
gloom as challenging times
call for businesses to be
innovative and adapt. Fiona
says Hertz has managed to
counteract the negative trends
by raising growth trends in all
its market segments. “This
has assisted us in retaining
and increasing our market
share in various segments.
We are mindful that business
is tighter in winter and we
have adapted our business
model accordingly.”
Leslie says Thrifty is
experiencing double-digit
growth, despite the economic
climate. “Our forecast is to
continue on this path for the
next 12 months. We see that
consumers are looking for
alternatives to leasing and
financing vehicles. There is
a trend toward mobility when
required, instead of owning a
car,” he says.
All you need to know about cross-border car hire
CROSS-BORDER car
hire is available with
most suppliers, but
certain countries and
car categories may be
excluded. Here is what the
experts advise:
Auto Europe gm, Kathleen
Moodie: “It is important
for the travel agent to
advise the car-rental
company of the client’s
intention to cross the
border and to list the
countries the client
intends to visit. This will
ensure that the car-rental
company prepares the
correct paperwork for the
client to be able to cross
borders. Cross-border
fees might apply in some
locations with certain
suppliers.”
Hertz’s Hans Manke:
“Hertz South Africa allows
cross-border travel into
Lesotho, Swaziland,
Namibia and Botswana.
There are procedures that
need to be followed prior
to the renter collecting
their vehicle in order
to prepare the legal
documentation to allow
them to cross the border.
This will allow a seamless
service at the counter.
Hertz also allows oneway drop-offs between
South Africa, Namibia and
Botswana.”
Bidvest’s Gaynor von
Loggenburg: “Bidvest
Car Rental allows cross
border into Namibia,
Botswana, Swaziland
and Lesotho. We charge
a cross-border fee and
this is used to return the
vehicle when necessary.
It is important for the
consultant to advise us
that the vehicle is going
across the border, as we
need to give authorisation
to take our vehicle
across. Documentation
is required from us that
is necessary at the
various border posts. If
this documentation is not
handed over, the vehicle
will not be allowed to
enter the country. We
don’t allow our vehicles
into Zimbabwe, Zambia
and Mozambique.”
Avis Budget’s Lance
Smith: “Cross-border
car rental into Namibia,
Botswana, Swaziland and
Lesotho is no problem.
Into all other countries
customers should be
aware that support in the
event of a breakdown,
theft or an accident will
be limited and will take
significantly more time.”
Which vehicle for which client?
CONSULTANTS should
always ask how many
people are travelling in
a vehicle, and the size
and number of cases
they are travelling with
to ensure that they book
the correct vehicle group.
For vehicle specifications,
consult Travelinfo and the
websites of the car-rental
companies.
Auto Europe’s Kathleen
Moodie, says car-rental
companies are unable
to guarantee a specific
make and model in a
vehicle group.
“The term ‘or similar’
means the vehicle your
client rents may not
be the exact make and
model as the picture
displayed. It will be
from the same car
group, meaning it will be
comparable in size and
performance. The actual
vehicle your client rents
will depend on the make
and model available at
the time within the car
group requested. It is
therefore important that
the correct vehicle group
is booked.”
Did you Know?
Get your customers to sign up for Avis Budget’s preferred
service so that they receive the fastest service when picking
up their vehicles and all the loyalty benefits.
Car-hire brokers versus direct bookings
LOVE them or hate them, carhire brokers are here to stay
and car-rental companies are
adapting to this reality.
Hertz’s Karen Schwartz
says: “Car-hire brokers are
technology companies that
have a much broader reach
than any other channel.
We have seen growth
through this medium in
both corporate and leisure
business.
“Our marketing strategy is
to work with them to improve
yield margins and reach
substantial volumes that an
individual domestic car-rental
company would not be able
to achieve through direct
car-hire bookings. But we do
encourage our loyal renters
to book directly with us to
maximise the benefits of a
global brand.”
Hertz, Thrifty, and Avis
Budget say travel agents
are still booking via their
GDSs or directly with carrental companies, especially
when there are corporate
agreements in place.
“It’s about relationships
sustained with your TMC,”
says Thrifty’s Leslie
Matthews.
However, Bidvest’s
Gaynor von Loggenburg
says discretionary leisure
business via the travel
agent is split between
direct bookings and using
a broker, depending on the
leisure rate offered.
Commenting on cheaper
rates offered by brokers,
Karen says: “Brokers
sell packaged rates that
are inclusive of unlimited
mileage, different waiver
options and prepayments.
Their nett pricing enables
them to position themselves
in the marketplace and
remain competitive without
diluting the direct channels
with car-rental companies.”
Adds Leslie: “Brokers
are an excellent source
of business and they
understand the dynamic
pricing game. So we support
them as a channel to market
when we require them. We
see them as an extension of
our sales arm.”
Gaynor says leisure
customers are shopping
online on all car-rental
broker sites to obtain the
best deals. “The more
competitive you are on rate,
the more leisure rentals
are secured via the online
platform.”
Insurance waivers: educate yourself!
TRAVEL agents must
ensure they fully
understand car-rental
companies’ rental terms
and conditions so they can
advise their clients about
their insurance waiver
options and liability.
Car-rental executives say
most car-rental companies
offer rate packages that
include standard insurance
waiver options for both
collision and theft. A
further top-up is offered
that slightly increases the
daily rate, but drastically
reduces the liability. It is
important that customers
choose the correct waiver
option.
Standard insurance
Auto Europe’s Kathleen
Moodie, says: “With most
car-rental companies, the
rates that are offered
include standard insurance.
The excess, or deductible,
is the sum you are still
liable to pay for damage to
the car or theft of the car.
If your rental includes the
basic coverage, that limits
the client’s liability to a
certain sum of money. For
example, if the excess for
your client’s rental is €100
(R1 597) and the damage
to the car is an estimated
€500
(R7 984), the driver will
be held responsible for
€100 (R1 597), while
the rest of the sum will
be compensated by the
coverage package. The
amount of the excess or
deductible depends on the
category of the car and the
car-hire company. Reading
the product descriptions
carefully, will assist travel
agents to select the
package that suits their
client best. Not all the
products are offered with
all suppliers, for all car
categories, or in all for all
car categories, or in all
destinations.”
Hertz’s Hans Manke
says it’s important that
travel agents advise their
clients about liability waiver
inclusions, as well as
breach of contract, which
could result in nullifying the
liability amount.
Bidvest’s Gaynor von
Loggenburg says breach
of waivers is a major factor
in the industry. “Examples
of breach when purchasing
our waivers are:
Not disclosing an
additional driver at the
time of rental;
Not returning the vehicle
on the said date and
time;
Any undercarriage
damage including but
not limited to gearbox
damages, water damage
where the vehicle is
driven through or in
water;
Damage caused by
potholes;
Any tyre, glass and
windscreen damage is
excluded from the waivers
in case of no theft or
collision (customer can
purchase an additional
waiver to cover tyre and
glass).”
Did you know?
Thrifty Car Rental has a reward programme designed
specifically for travel agents called Moolla Rewards! Rewards are based
on the vehicle group and length of booking. How to qualify: book using
the Thrifty travel agent rates; insert your name on the Thrifty voucher
when making a booking; Thrifty will load your Moolla Rewards directly
onto your e-wallet card. One Moolla=R1.
Get tech smart or check out!
INFORMATION technology is
becoming a key differentiator
that is helping South African
car-rental companies meet
customer expectations and
improve their profit margins.
Says Thrifty’s Leslie
Matthews: “If you’re not in
the game, check out. It’s as
simple as that. Technology
has forced companies to
become innovative.” He
says Thrifty has rejuvenated
its Blue Club product for a
growing corporate market,
offering customers a free
express rental programme.
First’s Melissa Nortje
agrees: “Technology is a
must-have. Mediocre solutions
have no place in a cut-throat
industry as dynamic as
transportation.” She says First
is installing South Africa’s first
self-service car-hire check-out
throughout its branches and
offers a Show & Go mobile
check-out facility for frequent
corporate customers.
Avis Budget’s Lance Smith
says mobile applications are
fundamentally changing the
way customers interact with
both the car-rental company
and the rental vehicle. Hertz’s
Fiona Angelico says digital
transformation is a key
component for Hertz to remain
in the forefront of car rental in
Southern Africa. “In the next
few months, a few exciting
projects will be launched.
New apps
These apps will improve our
business performance; more
importantly our customers’
experience.” Hertz already
offers a damages app that
enables it to reduce its
returns process and instantly
supply the renter with a
damages invoice, says Hans
Manke. Another innovation is
Bidvest’s Snappdrive keyless
app, which allows renters to
avoid queues and speeds
up their check-out time, says
Gaynor von Loggenburg.
Meanwhile, the impact
of market disruptor, Uber,
appears to be limited to
same-day rentals, whereas the
impact on multi-day rentals is
negligible, executives agree.
“In fact, there is a massive
Uber market that rents their
vehicles from car-rental
companies,” says Leslie. “Car
rental is also really cheap
when comparing what you pay
for more than a 24-hour period
with Uber for transport.” Hertz
gm international sales and
marketing, Karen Schwartz
says Uber has its place in
the market as a taxi service,
whereas chauffeur-drive/
transfer services offer a
more exclusive, professional
service.
Snappy service
with Snappdrive
Bidvest Car Rental’s
Snappdrive app is to be
rolled out to the leisure
market following its
successful introduction to
the corporate market. With
Snappdrive, customers
can head straight from the
aircraft to their car, saving
them time. The Snappdrive
app helps them find their car
and their phone acts as the
key to unlock, lock and start
the vehicle. A Snappdrive
RFID card acts as back-up
when a phone is unavailable.
Faster with First
First Car Rental’s self-service
technology is an industryfirst check-out solution
that allows clients to hit
the road in seconds. Using
touch-screens, customers
can upgrade vehicles, add
windscreen and tyre waivers,
sign on screen and check
out in 15 seconds if they are
corporates and 40 seconds
for pre-authorised, pre-paid
credit card bookings. Average
check-out time is four
minutes 25 seconds, less
than a third of the worldwide
average.
Hertz’s Mobile Assist
takes away the hassles
Hertz’s Mobile Assist app
offers roadside, medical and
legal assistance and advice
on accommodation and road
directions. At the press of
a button, a Hertz central
reservations agent contacts
your clients immediately
to offer advice. Firefly Car
Rental – Hertz’s no-frills car
rental brand – offers highly
competitive rates because of
its high-volume approach and
limited car group availability.
It is represented at all Hertz
locations in SA.
