Q&A: Avis – Staying Relevant
Q: What is the state of the car rental industry in South Africa?
A: The measured car rental industry has a fleet in excess of 70 000 vehicles that facilitate 2,7 million rental transactions and in excess of 17 million rental days. The revenue generated by the industry, before taking into consideration the value of vehicles sold when they reach the end of their rental life, is in excess of R6 billion. Like the South African economy, the car rental industry has not grown in real terms in 2019, and this after contracting in 2018.
Q: What is the future of the car rental industry in South Africa?
A: The industry will continue to grow as the domestic economy recovers and both domestic and foreign tourism doubles to 21 million by 2030. Corporate and leisure travellers will continue to need vehicles, as we are a vast country with an underdeveloped public transport system. There will be competing transport solutions available to travellers, such as ride-hailing, but this will remain a service that meets short period and distance movements.
Q: Can you talk through the most recent technological innovation Avis has rolled out?
A: In December we are launching self-service at O.R. Tambo International and Cape Town International for all Avis Preferred customers who have downloaded the Avis app. The app will enable customers to skip the queue, bypass the traditional rental kiosk, go straight to their vehicle, choose their exact vehicle – subject to availability – and add the extras they want and when they want them.
Q: How has the Zipcar acquisition by Avis six years ago impacted on the overall Avis business globally?
A: Zipcar still is a very small part of our global business and has given our group great learnings on future business models for transport. This will be known as a transport solution (TaaS). TaaS will fundamentally change our business model, as this service will not only meet the needs of customers when they travel away from home, but also replace car ownership as we know it today. TaaS will be a massive disruption to the motor and related industries. In fact, we can go back more than a century to see a similar disruption in the mode of transport, when the internal combustion engine replaced the horse!
Q: Is Avis – particularly locally – looking at any other similar partnerships or acquisitions that would change its offering materially?
A: Globally, we are co-operating with Amazon, Google (Waymo), Uber, Lyft and even cities such as Los Angeles, and locally we will take our lead from our principal. Working with cities on the future of TaaS is critical, as it is predicted that by 2030, 95% of all driven miles in major cities will be by TaaS. This could lead to an 80% reduction in vehicles on the road, freeing up more than 30% of inner-city space previously used for parking vehicles, along with a significant reduction in carbon emissions. There are so many other opportunities and impacts on life as we know it.
Q: As always, we need your current thoughts on the ride-sharing industry, generally, and its impact on your business?
A: No measurable impact on our car rental industry, but I have no doubt that customers that need to travel for a day or less will consider this option.
Q: In terms of ‘in-car’ experience, what are the latest developments in the global car rental industry?
A: JD Powers’ recent survey found that rental car satisfaction scores were highest when vehicles had 21 or more features, such as cruise control, GPS, USB ports, and premium sound systems, but those scores plummeted 140 points when renters indicated that vehicle features were difficult to use.
Q: How long before we will see self-drive vehicles in South Africa?
A: Within the next 10 years, subject to the required legislation being passed.
Q: What keeps you up at night, from an Avis business point of view?
A: Ensuring that our service continually improves to ensure that we connect our customers in moments that matter to them.
Q: Where would you like to see Avis in 10 years’ time?
A: The leader in car rental as we know it now, and a significant provider of the new business model of transport as a service (TaaS).