By Tom Smith – UK country manager at Targa Telematics

Tom Smith, UK country manager at Targa Telematics

The rental market has been a pillar of the European automotive sector for many years; a true pioneer in the use and diffusion of the latest mobility trends, both from an operational and technological perspective.

The UK market offers a welcoming environment for innovative solutions. In 2021 the UK recorded the highest telematics penetration in Europe, at 25% and 66% respectively for leasing and rental fleets. Furthermore, research shows that by 2025, telematics penetration will reach 34.5% in leasing and 95.3% in rental fleets.

This sector has a history of successfully anticipating new trends in mobility, such as the transition towards more sustainable modes of transport, including hybrid and electric vehicles.

The automotive sector is facing huge challenges, none more so than the short-term rental sector, which is closely linked with the tourism industry and was severely impacted by the Covid-19 pandemic.

Issues with global supply chains, including a shortage of semiconductor chips, exacerbated by the crisis in Ukraine, resulted in a downturn in vehicle registrations. This situation led to a reduction in the availability of rental vehicles, despite increasing demand since summer 2021 as the tourism industry reopened.

These external factors have threatened the business model of many short-term rental companies, which are reliant on the ability to rapidly increase the size of their fleet before summer and then reduce it once the demand has tailed off towards the end of the year.

Short-term rental companies downsized their fleets during the pandemic as global demand for mobility was significantly curtailed and a number of these companies took the opportunity to implement a more efficient approach to managing their internal operations.

Given the circumstances, these plans included increasing the length of time vehicles remained within the fleet, often keeping them for well in excess of 12 months instead of the much shorter traditional cycle. With this changing model came new responsibilities more often associated with the leasing sector, such as management of car servicing and maintenance; crucial given the importance of these tasks being completed in line with the manufacturer’s guidance to maintain the vehicle’s resale value.

This new responsibility brings additional complexity for short-term rental companies, such as monitoring the vehicle’s time and mileage between service intervals, managing vehicle recalls and planning the operational impact of removing the vehicle from service during maintenance. Other considerations include managing the servicing and maintenance process, limiting the time the vehicle spends in the workshop and reintegrating the vehicles back into the available fleet once they are returned.

Vehicle theft, already a key issue within the short-term rental market, has even greater implications in an environment where sourcing new vehicles is challenging. In this context, the impact is not just the financial loss of the vehicle, but also being deprived of a revenue-generating asset.

Two key factors in determining the profitability of a short-term rental company are limiting vehicle inactivity as much as possible and preserving vehicle value over the term of ownership. In addition, it is increasingly necessary to improve the interaction with the customer in order to streamline backoffice processes and improve customer experience.

As such, the ability to leverage digital technology to optimise the utilisation and efficient allocation of vehicles and to engage with the customer is an important determining factor in the competitiveness of a short-term rental company.

Fleet digitalisation enables local fleet operations to monitor and preserve the value of their own vehicles. For example, connected car data can be used to determine when vehicles are ready to be collected, if they are at the agreed location and to provide information on the vehicle’s status. Additionally, this data can facilitate a more proactive approach to vehicle maintenance, allowing work to be better planned, enabling timely and accurate monitoring of the vehicle, and reducing the risk of unplanned interventions.

Digitalisation is also key in monitoring for instances of vehicle theft, fraud and embezzlement. By employing advanced artificial intelligence and machine learning algorithms, potential risks can be proactively identified in real-time, alerting to instances of inappropriate and non-authorised vehicle usage. A professional, Europe-wide 24/7 Operation Centre is able to intervene when cases of theft or other emergencies are detected, liaising directly with local authorities to resolve the situation.

Furthermore, digital solutions such as ‘Keyless Access’ are an essential tool for vehicle rental, allowing remote, autonomous rental management. A seamless customer experience is delivered with the ability to book, open and close the vehicle via a smartphone app, as well as offering further upgrades at the touch of a button, such as amending the length of the rental period. The solution provides significant benefits to the rental company too, allowing efficient management of the check-in and check-out process, and automatically delivering important information such as the vehicle’s fuel level, or battery level for EVs, mileage covered and alerting of potential crashes and damages.

Targa Telematics supports short-term rental companies across Europe in identifying where digital transformation can benefit their business and partnering with them to implement solutions that deliver a real competitive advantage, benefiting both the company and its customers.

The company boasts a wealth of experience in connected mobility and in the development of digital solutions for leasing and short-term rental companies, as well as large corporate fleets, along with the expertise and technical capability to co-create bespoke solutions for their clients. Furthermore, with a wide ecosystem of complementary services and partners, it can rapidly provide a perfectly integrated, unique product to meet its clients’ requirements.