How AI Analytics Can Give Car Rental Companies a New Edge 

Car rental operators have enjoyed high demand as both leisure and business travel rebound to pre-pandemic levels. But with rising fleet costs and sky-high rental prices, how long can companies keep rates affordable while sustaining profit margins? As with many industries, AI may give car rental companies a new edge, leading to greater efficiency and cost savings. But it’s also revolutionizing the customer experience, resulting in new ways to build customer loyalty and increase competitiveness, not just by price, but by giving your customers greater personalization and convenience. It all starts with having customer data ready at your fingertips.  

A Challenging Time for Car Rental Operators 

The car rental industry has seen quite a lot of upheaval in the past few years. Operators have been challenged with everything from supply chain disruptions to soaring inflation. Many reduced their fleets during the height of the global pandemic when travel restrictions dampened demand from both leisure and business travelers. Once they were ready to shore up their fleets again, semiconductor chip shortages meant fewer vehicles were available, leading to slim pickings at the rental counter, even while consumer demand remained strong.  

Thankfully, most U.S. operators have resolved their fleet shortages now that car manufacturers have returned to normal production levels. However, higher interest rates and fewer manufacturer deals mean that a car that was once financed at 2% is now seeing rates around 8%, adding significant cost increases to fleet acquisition. So much so, that this year's Auto Rental News Fact Book cited it as the top concern among industry leaders, with 41% of car rental operators agreeing that costs are problematic, and 76% believe it will only continue to worsen.  

A shift in manufacturing from basic car models to luxury vehicles with higher trim levels and content has also meant a shortage of affordable mid-range sedans, a mainstay of the rental industry’s economy lines. As a result, many rental operators have had to restock their fleets with more expensive vehicles, which has led to an almost  80% increase in the daily rental rate since the end of the pandemic. But, rate increases can only rise so far before customers start looking for other options, leading car rental companies to question their long-term profitability and whether they have enough of a profit margin to sustain them.  

Satisfaction Holding, But Competition is Rising 

The good news is that, generally, rate increases have not yet soured rental customers. According to J.D Power’s latest Rental Car Satisfaction Study, overall satisfaction with rental operators has increased 14 points, even though the cost to hire a full-sized hatchback this summer could run you about USD$ 709 per week, and add-ons, such as additional drivers, have increased 3% in the past twelve months. That would be for the same rental that, pre-pandemic, would have cost only USD$ 400 per week. 

What happens, though, when tourists and business travelers, two of the sector’s largest consumer segments, decide that rental cars are no longer affordable?  

Customers are already questioning whether car-shares like Turo, or ride-hailing services like Lyft, are better, more affordable options. These app-based services offer a level of convenience that has eluded traditional car rental operators. Their mobility as a service (MaaS) model allows customers to do everything in-app, with 24/7 service, affordable rates, flexible scheduling and customization such as vehicle preferences and upgrade options to electric or luxury cars.  

Yet, amid this digital revolution is exactly where car rental operators can find their new competitive edge. Artificial intelligence is set to transform the car rental industry, integrating digital and automation tools to create a more seamless operational environment. There's the potential for improved crash detection and automatic assessment of accident severity. AI could lower maintenance costs by integrating with maintenance software, to alert technicians only when a vehicle needs servicing. Predictive analytics can even help find a lost or stolen rental car. 

AI can also be used to enhance the customer experience. But, the first step is understanding your customer base, and what they want, which is where advanced analytics comes into play.  

How AI Analytics Can Give You an Edge 

Contact center data is one of the most precious assets that rental operators own. It is exactly what companies like Uber and Lyft have been able to leverage to refine their business models and offer unprecedented digital experiences that have increased their competitiveness and customer loyalty.  

Today, AI has added a whole new level of business insight, gathering immense sets of customer data from contact centers and countless customer interactions. Advanced analytics are helping companies find potentially untapped consumer markets, and revenue streams, such as eco-conscious tourists who may be willing to spend more on electric or hybrid vehicles. 

Through our AI-powered itelligence platform, we can analyze everything from contact volumes to key performance indicators (KPIs), past purchases, and customer sentiment, using AI to extract relevant keywords, such as popular vehicle makes and models, leading to actions that enhance personalization, customer satisfaction and engagement.  

For instance, we can use a customer’s historical data to provide tailored recommendations for suitable vehicles, add-ons, and even competitive pricing based on real time market demand. Our system can also verify that agents are upselling by using Generative AI to detect word combinations that show compliance with upselling best practices. 

Once we have finished a 360-degree assessment, our Data Science & Innovation team can help you create digital end-to-end CX solutions based on the unique needs and preferences of your customers. Imagine offering your customers new ways to rent a car whenever they choose, seamlessly and easily, without having to call a contact center.  

This efficiency not only reduces overall operational costs but increases profitability. It can also help you better manage seasonal peaks by encouraging more customers to self-serve using digital channels or AI assistance, which positions your car rental company as the one that offers their customers the most flexible, convenient and personalized experiences on the market. 

Learn more about digitizing your customer experience journey and the power of AI analytics.