The Future of Rental Cars Is Here

Tech-enabled ride-sharing platforms such as Uber and Lyft are the buzzy transportation options these days, but the trusty rental car remains the vehicle of choice for many business travelers. One reason, the Global Business Travel Association notes, is that corporate travel policies haven't caught up with the times.

When many business travelers get off the plane, they skip the taxi or the chauffeured bus and head right to the car-rental counter.

And that counter looks quite different these days. While standbys like Avis and Hertz remain common, a whole batch of newer players are shaking up the world of business travel.

Car-sharing companies such as car2go, Zipcar, and Enterprise CarShare—which offer membership plans and charge for car use by the hour—have become common in many cities and are even starting to expand their reach around airports and train stations.

Some startups are even beginning to eye the airport space exclusively. Silvercar, which has a presence at 10 airports nationwide, has taken an app-first strategy to car booking, allowing customers to pick up a car—in all cases, an Audi A4—without even speaking with an attendant.

The result of all these changes is that an industry that has undergone quite a bit of consolidation in recent years, with mergers affecting both traditional car-rental companies and newer ones like Zipcar, is seeing lots of innovation without nearly the level of attention that ride-sharing companies like Uber have received.

Travel Policies favor rentals

The Global Business Travel Association (GBTA) believes that the opportunity is ripe for car-sharing firms to see some growth from in the business travel market. A study released by the GBTA Foundation in July found that the most popular form of ground transportation for business travelers remains the rental car, with 36 percent of respondents opting for their own vehicle. Meanwhile, taxis (used by 24 percent of respondents) and chauffeured transportation (13 percent) also remain ahead of ride-sharing, which was preferred by 11 percent of respondents.

One factor that may account for ride-sharing’s low total is that some airports refuse to allow Uber and Lyft to offer their services at the terminal. But according to the GBTA Foundation, the biggest problem has to do with corporate travel policies.

“Our research shows one in four (24 percent) travel buyers say their company does not allow their business travelers to use ride-sharing companies, by far the highest percentage for any form of ground transportation,” GBTA Executive Director and COO Michael W. McCormick said in a press release.

Automakers Join In

Car-sharing could offer up a modern approach that gets around some of the downsides of ride-sharing for corporate travelers.

And perhaps for that reason, many automakers are embracing this transportation option as a potential growth area. Daimler AG, for example, owns car2go, and The Detroit News notes that General Motors, Ford, and Fiat Chrysler are all exploring the business.

There’s plenty of room for growth. The Detroit News highlights data from consulting firm Frost & Sullivan showing that in 2014, 1.3 million people in the United States used car-sharing platforms and that this number is expected to more than double by 2020.

Even so, it might be good to double-check your organization’s travel policy before booking your next business trip. “Corporate policies haven’t caught up to the marketplace,” McCormick said in comments to the New York Times.

(Chip Somodevilla/Getty Images)

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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