Pub. 1 2018-2019 |Issue 3

16 T he car industry is ready for disruption. The specifics are still unclear, and will depend on several different possi- ble business models, but one way to handle a potential disruptor is to focus on the opportunity it presents instead of the end of a particular way of doing things. Take for instance ride sharing, a market trend that currently seems to be owned by Uber and Lyft, in much the same way that the tissue market is owned by Kleenex. Most cars sit unused most of the time. That’s what makes Uber and Lyft so attractive. People who have cars can keep them busy most of the time, and that extra activity makes it possible for other people to get away with not owning a car at all. Scheduling a ride is as easy as downloading and using a smartphone app. But what if you don’t want someone else to drive you around? Using Uber or Lyft has some of the same shortcom- ings as relying on a bus. You are relying on other people to show up on time and get you where you need to go. The reality of that may be a lot less efficient than its advocates are willing to admit. What if you could make it easier and more convenient to rent a car than it currently is? Isn’t it better to have a business that can rent great cars at a great price from a location that is more convenient than the airport? And who is better positioned to do just that than a car dealership? Good rental custom- ers aren’t going to just want to rent a car. They will also sometimes want to buy that car. The result is simple. Dealerships have plenty of room to take advantage of the weaknesses in the car rental and the ride sharing markets while improving their position for the larger changes to come. Why does the car rental industry need disruption? Most rental businesses currently compete on the basis of price, somewhat like Walmart. The cheapest cars are pretty basic and don’t have the latest safety features. Why? The industry generally rents cars to people who don’t rent all the time, and who are therefore not interested in developing a relationship with any particular company. For such a short- term business relationship, it’s not surprising that a low price is the most important aspect of the transaction. Many car rental companies advertise that they are willing to pick customers up, but it’s like getting delivery from a pizza place; you have to be within a certain geographical distance of the business. Also, when you look at the choices, no matter which rental com- pany you are considering, the cars that are available at a convenient location aren’t cheap and may not be available when you want them. If price matters to you, as it does for most people, then the best place to pick up an inexpen- sive rental car is usually at the airport. Car Rental Model A