In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche
Hertz Global Holdings (NYSE: HTZ) and Avis Budget Group (NASDAQ: CAR) have a dangerous new competitor. BMW (OTC: BMWY) has entered the car-rental business.
The German automaker has launched ReachNow; a combination car-rental and ridesharing app, in three U.S. markets; Seattle, Brooklyn, and Portland, Oregon. ReachNow offers short-term car rentals similar to Avis’s Zipcar, an Uber-type car service and one to five day use of rental cars.
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The volume of lease returns is expected to increase by around nine percent in 2017, J.D. Power estimated. That means dealers will be flooded with clean late model vehicles in good condition. If this prophecy comes true, it’ll cut the value of trade-ins by around nine percent.
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Or the car-rental companies might find themselves facing a greater nightmare. If Uber were to collapse, a major automaker might buy it and Hertz and Avis would find themselves competing directly with Ford (NYSE: F), Toyota (NYSE: TM) or even Volkswagen.
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There is finally some evidence to validate the hypothesis that networked-transportation solutions such as Uber are a threat to car-rental companies.
The percentage of North American business travelers that listed Uber and Lyft on their expense reports exceeded the percentage those who listed car rentals for the first time, Bloomberg reported. The accounting software firm Certify reported that 40% of professionals listed car rentals as an expense and 43% listed ride-hailing apps as an expense during fourth quarter 2015.
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For the first time; more business travelers listed ride-hailing apps such as Uber and Lyft than rental cars on their expense reports, accounting software firm Certify reported. Certify found that 43% of business travelers used networked transportation solutions; and only 40% rented a car in fourth quarter 2015, Bloomberg reported.
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