The $100 billion Western rental car industry, flush with cash from a profitable pandemic, is slowly getting its electric show on the road, and Chinese-made vehicles are set to play a starring role. According to a European executive, the electric transition could see the car fleet, long dominated by well-known marques from the United States and Europe, moving towards Asian automakers. “Historically, European and American manufacturers have had the edge, but the shift towards electric is shuffling the cards,” said Olivier Baldassari, the group’s leading countries and operations officer for rental giant Europcar.
Citing Great Wall Motor’s Ora line, he said electric cars from Chinese and Asian manufacturers can be compared to Western models in terms of quality, but are generally priced lower.
Small savings are important even in the huge rental industry, which buys millions of new cars a year – a tenth of all new cars in the United States alone – and provides a leading indicator of wider auto trends in society.
Companies in the sector have long resisted the electrification rush due to weak demand for electric vehicles (EVs) among consumers worried about being left out of power.
Yet many analysts said now is the best time to start as companies bolster their coffers with bumper profits during a pandemic that has emptied public transport and airports, and within driving distance. Celebrated more holidays.
In the United States, rental car companies received monthly revenue of $1,320 per vehicle in 2021, according to Auto Rental News. This compares to about $1,000 pre-pandemic.
“In the past, companies have stuck their heads in the sand,” Nick Mountfield, associate partner at OC&C Strategy Consultants, said of electrification. “Now we’re starting to see people saying they have to do something and make plans.”
Graphic on US Rental Fleet: https://tmsnrt.rs/34PGDVK
Graphic on US Rental Car Revenue: https://tmsnrt.rs/3JHCORx
watch your speed
Hertz was an early mover last October, when it announced a planned purchase of 100,000 vehicles from US trailblazer Tesla, increasing pressure on rivals to plan for the transition.
Meanwhile, French-based Europcar has promised to make 20% of its fleet electric or low-emission hybrids from now 3% by 2024, meaning it will need to buy 70,000 cleaner vehicles over the coming two years if it can. restores itself. In a fleet of 350,000 vehicles owned pre-pandemic.
Rental companies sold their fleets as demand plummeted at the start of the pandemic and struggled to gain volume amid a global shortage of semiconductors, which hampered vehicle production.
Baldassari said Europcar was sourcing EVs from Great Wall Motors, SAIC Motor and Polestar, which are owned by China’s Geely and Volvo Cars, though it was also buying from traditional partners including Renault and Stelantis.
The company’s China strategy could change, however, if German carmaker Volkswagen AG manages to turn down its offer to buy the company in the second quarter.
Industry players are moving at different speeds, each making their own calculations based on their respective markets.
In the United States, where many customers prefer SUV and pickup models that have not yet been electrified and public charging infrastructure lags far behind in Asia and Europe, Enterprise Holdings is on a more cautious note.
Enterprise’s assistant vice president of innovation Chris Hafenrefer said electrifying just a quarter of Enterprise’s fleet at Orlando Airport — its largest consumer rental location — would require the same amount of daily electricity to power more than 1,000 homes. .
Hafenrefer said the group currently has several thousand EVs in North America, including those from Tesla, Nissan, Hyundai, Kia and Polestar. While the company said it has held talks with all global automakers, it has no immediate plans to boost that stock.
“At a high level, we want our consumers to guide us in terms of what they are looking for,” he said. “Many car rental companies have historically taken that wait-and-see approach because we are still in the early stages of the transition.”
Graphic on US Industry Vehicle Purchase: https://tmsnrt.rs/3gXAVnj
set foot in the west
The varied pace of change, and the time frame for massive fleet overhauls, mean that gasoline-powered vehicles are expected to remain the bulk of purchases for the coming few years. Global automakers’ transition plans will make up at least 40% of electric vehicle sales by 2040.
Yet ultimately this change could prove far-reaching for the Chinese fortunes in carmakers in Europe, a crowded, competitive auto market dominated by storied brands that in the past proved elusive to crack. Has happened.
Over the years, they have struggled with the notion that China, fueled by cheap mass production, cannot compete on quality. Yet such arguments are challenged in a new reality, in which top Western carmakers such as BMW and Tesla now produce cars in the country, a technology powerhouse and the world’s largest auto market.
Great Wall Motor, one of Europcar’s suppliers, is expected to launch its Aura Cat compact electric car in Europe this year, priced at around 20,000 euros ($22,260), with a range of around 250 miles (400 km), The Chinese are involved in a growing number of EVs. Manufacturers are trying their luck on the continent.
In the OC&C strategy, Mountfield said Chinese manufacturers using the rental channel to establish brand awareness and increase sales volume followed a playbook Kia and Hyundai used to gain a foothold in Western markets in the 1990s. do.
(Reporting by Tina Bellone in Austin, Texas; Editing by Pravin Char)
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