Look Mom, No Hands! The Future of Car Rentals in The Age of Autonomous Cars

What happens to the car rental giants when autonomous cars are a thing?

The car rental industry seems to be holding its own as far as market share goes, although growth arguable has been dampened by ridesharing services, as mentioned by PhocusWright recently, reporting that rental car 2016 growth in the US was only 1%.

So it its true, that rideshare is having an effect on car rental growth, then that begs the question: What will happen to Hertz, Enterprise, Avis etc when Elon Musk’s, Uber’s and Google's autonomous cars fill the streets?

The car rental industry in ginormous, $73 Billion globally, with the US alone representing nearly 40% of that, at around $28 Billion with 110 million reservations made by 70 million renters using 2.2 million cars.

Critical Capabilities Coming to the Fore?

If the car rental industry was to be disrupted, in my view its not going to be sudden nor easy to do. The industry would argue that it has critical capabilities and expertise that on the surface are not obvious, namely its ability to get cars to where they need to be fast. Sonari Glinton in his recent article, believes this will be a critical capability of any autonomous car company.

Hence the logistic aspects of the car rental industry, which leverages aspect of AI (predictive analytics mostly) powered by the collective wisdom of the car rental industry, may become a key part in who plays a pivotal role in the “look mum no hands” car industry.

Don’t Hold Your Breath...

I attended CES for this first time this year, and was super impressed by the sheer scale and quality of the conference. While walking through to auto exhibition hall, it was evident to me that the car companies are still pretty much selling an idea when it comes to self-drive cars. Despite the hype and massive investment in their exhibition stands touting autonomous cars - no car company had anything to actually sell. Predictions of when the first fully autonomous cars will be on the roads in the US range from 2020 to 2035.

According to Johana Bhuiyan, a senior transport editor makes the point that the fleet turnover can take up to 15 years, hence even if car manufacturers started making only self-drive cars in 2030, there would still be a mix of “manual, semi and fully autonomous cars until 2045 or later”.

Family Road Trip Vacation in an Autonomous Car?  

Ok, so I reckon autonomous cars will mostly be used for urban trips as opposed to long distant road trips. Can you imagine sitting passively in an autonomous car from Vegas to the Grand Canyon? Maybe I’m old fashioned, but I really enjoy driving fast on scenic highways, and being a backseat driver wouldn’t be my cup of tea. However, Alex Bainbridge recently argued that the multi-day tours for mid to large size groups will embrace autonomous vehicles.

Though, as far as the car rental industry goes, my guess is rental companies will initially increase the number of vehicles in their fleets that have semi-autonomous features such as automatic braking and steering. More a safety feature than trying to replace the driver.

And over time they will partner with self-drive tech and car manufacturers to slowly but surely add semi and fully autonomous cars to their fleets while potentially playing a leading role in autonomous car trips to and from the airports within which they operate.

And what about the notorious insurance related to a rental car? ….we’ll cover that in a future blog :-)