Blurring Boundaries: Shifting Dynamics in Carsharing, Car Rentals, and Everything in Between

There’s been a peculiar trend in shared mobility over the past few years, and it’s among the most significant developments we’ve witnessed since Vulog’s own inception in 2006. Car rental and carsharing offers are converging and it is undeniably shifting the mobility landscape, setting up a wealth of new opportunities for those who know how to leverage it. 

And Then There Were Three: The Impact of Digital Disruption on Rental Services

For many years, traditional rental was the only game in town, and if you temporarily needed a car, you’d have to go to a rental agency to get it. Even when carsharing began growing in popularity over twenty years ago, there was still an obvious demarcation between the two. You need a car for just a couple of hours? Carsharing. You need a car for a couple of days? Rental.  

However, the rise of digitization coupled with the rapid evolution of carsharing offers has led us to an interesting industry inflection point. The formerly clear lines between these services are beginning to blur together and within this grey area we see the emergence of what you might refer to as “digital rental” solutions.

As digital rental and carsharing offers mature, incorporating new features from one another and building on each other’s strengths, fresh avenues for innovation and growth are opening up. Let’s take a closer look at how carsharing is becoming more like car rentals, and vice versa, and its implication for these mobility operators. 

Carsharing, Traditional Rental, Digital Rental – What’s the Difference?

First, what do we mean by carsharing, traditional rental, and digital rental? 

Carsharing 

The earliest iterations of carsharing were rental vehicles that were made available in a free-floating or station-based format. They allowed users to instantly reserve a nearby vehicle for a few minutes or hours, eliminating the need to visit a rental operator entirely. Cars could be parked either freely in a demarcated zone or at a specified station. Carsharing has since evolved substantially, but more on that later. 

Traditional Rental 

Traditional rentals allow for bookings to be made well in advance, most often online, and require the renter to go to a physical rental agency to complete paperwork, validate drivers licenses, and pick up keys; all with the help of an agent. The vehicle must be returned to the rental agency, although renters occasionally get some flexibility with the option to drop off in another city’s agency. Unlike carsharing, insurance and gas is not included in the rental. 

Digital Rental

Traditional rental’s digital counterpart innovates upon this offer, taking a chapter out of carsharing’s book by streamlining the rental process with contactless, online reservations. Users can upload the necessary documents in advance, cutting out the paperwork and reducing time at the counter in half when they arrive to pick up their rental. Like traditional rental, insurance and gas are not included, and users typically collect and return the keys with the assistance of an agent. 

Minutes, hours, days: A new timeline

As innovative digital options continue to evolve in both carsharing and rental domains, the traditional distinctions between these services are becoming less clear-cut. The decision to opt for carsharing or rental is no longer solely dependent on the duration of car usage. 

Now, users have a plethora of choices in terms of vehicle selection and service offerings, catering to almost every conceivable day-to-day need that would typically prompt car ownership. Whether it’s commuting to work, running errands, moving apartments, embarking on a day trip, or planning an extended vacation, users can turn to certain carsharing or rental types to satisfy their needs. 

Time spent with the rental per service type:

Is Carsharing the New Rental?

Carsharing has significantly evolved over the years, with many operators now offering a range of features and service models that provide a “car rental experience” while maintaining the key conveniences of carsharing.  

Cruising the countryside with MOL Limo

Some interesting new features we’ve seen include…

Scheduling in advance: Schedule-a-trip functionality enables free-floating carshare users to book vehicles from just a few minutes to several months in advance. The flexibility of free-floating carshare, with the vehicle guarantees of car rental – what’s not to love?

One-way carsharing: Certain carshare operators have deployed dedicated parking in high-demand areas, such as an airport parking lot or resort destination. Renters can grab a car from their free-floating homezone in the city, and take a one-way trip straight to their off-site destination. With the proper use of pricing incentives, operators can balance trips in the other direction, making this a hands-off experience for the operator and a convenient option for the renter.

Long(er)-term booking: Who said carsharing was just for inner-city trips? In a move to compete with traditional rental’s core offering, innovative carshare companies curate unique pricing schemes to not just allow, but encourage multiple-day or even weekly carshare bookings.

Vehicle diversification:  Need an SUV one week, and a slick sports car the next? Your local rental agency probably has you covered. Certain carsharing companies have noticed this desire for flexibility, and see opportunities outside the common carshare offering of a 4-door city hatchback. Some of your favourite carshare operators are adding utility vehicles, luxury electric vehicles, and even vehicles equipped with sports racks.

B2B Is Burgeoning With Potential for Carsharing

While most carsharing services have traditionally focused on the individual consumer, we see more and more Vulog clients targeting the B2B segment with innovative pricing schemes and company perks. 

Catering to a company’s mobility needs has many perks for carshare operators; B2B usage is typically during the off-peak periods of weekday office hours, monthly driving commitments create predictable revenue streams, and B2B drivers typically treat vehicles quite respectfully compared to their consumer counterparts.

On the other side of the street, benefits abound for the company clients who sign up for these B2B carshare programs. Most importantly, corporate carsharing enables companies to cut costs and carbon emissions by avoiding fleet ownership and maintenance, while offering employees a coveted perk. In addition, many carshare operators will offer these companies simplified program management tools, preferential driving rates, and even dedicated fleets of vehicles to be shared amongst employees. 

Keep an eye on this space; the B2B mobility market is primed to grow exponentially, and innovative carshare operators continue to deliver unique benefits which rival the legacy experience of corporate fleet ownership.  

Expanding Services and Cutting Queues: A New Generation of Car Rental Offers

In that blurry overlap between carsharing and traditional rental models, we have digital rental. It takes the advantages of traditional rental – such as longer rental periods, the ability to pick up a car in one city and drop it off in another hundreds of miles away – and integrates the quick and counterless experience for which carsharing is known. However, it does not offer a perfectly analogous experience to carsharing as it is almost always a station-based model that lacks keyless entry. While not yet widespread, rental agencies are beginning to deploy self-service kiosks and dedicated key pick-up lines, allowing some renters to skip the queue and hit the road sooner.

Legacy Car Rental Is Stepping up Its Mobility Game

Sixt adds carsharing services into their portfolio mix

Certain car rental businesses are taking this one step further by not just offering digital rental services, but also deploying dedicated carsharing services as well. Sixt and Enterprise Mobility are among the most prominent examples of this, using their massive fleets to unite carsharing and digital rental, allowing users to book any of their services on one app. 

Since the launch of the Sixt ‘One’ app, renters can book any of Sixt’s services, including additional cars from mobility partners’ fleets, such as Miles carsharing in Belgium.

Following a model akin to Sixt, Enterprise Mobility has streamlined its services worldwide, encompassing carsharing, digital rental, subscriptions, and much more under a unified brand. Acquisitions of carshare services like AutoShare carsharing have helped to broaden their reach into the urban consumer segment and encourage customer loyalty amongst users with diverse mobility needs. 

Brand New Digital Rental Players Are Shaking Things Up

In the digital rental market, emerging players are going one step further by seamlessly integrating the efficiency of digital rentals with the extra convenience of carsharing. These operators – typically digital operators without physical agencies, may offer smaller fleets and operate in fewer locations than traditional rental companies, but they harness cutting-edge technology to enhance user experience. 

For instance, the digital rental service Kyte provides extra flexibility by delivering and retrieving all reserved cars to the user’s chosen location within a 15-minute window. Digital operators such as UFO Drive also offer car delivery services coupled with keyless entry, allowing customers to unlock the cars via an app on their phone. And on the far end of the “aversion to human contact” spectrum, operators like Vay even offer a driverless pickup and drop-off service with keyless entry with the help of their ‘teledriver-controlled’ EVs. 

It All Comes Down To Getting the Drivers Behind the Wheel Uber Fast

So, you may see a bit of a trend emerging here – nowadays, most innovations in the rental space are focused on reducing the time it takes to get ‘bums in seats’, as they say. For rental and carsharing operators, time is clearly of the essence as they compete with the likes of ridehailing competitors who can get users into vehicles in a couple clicks. 

Carsharing has always leveraged connected vehicle technology and thus has been able to compete with ridehailing services to get users behind the wheel fairly quickly. Similarly, rental operators now have the opportunity to benefit from connected vehicles in the same way, drastically reducing the time it takes to get drivers driving. From our experience with both carsharing and rental operators, we’ve found that those who take advantage of connected vehicle technology are able to get their customers’ trips started twice as fast compared to traditional check-out methods. 

What the Future Holds for Carsharing and Digital Rental

In an industry where the lines between rental and carsharing are swiftly blurring together, what is the secret to success for mobility operators looking to keep up?

Embrace the blur! 

According to a recent survey by Leo&Go, Vulog’s mobility showcase which offers carsharing, rental, and subscription services, three of the most important reasons users choose their service are convenience, choice, and price. 

The only way to give consumers the flexibility, accessibility, and affordability that they are demanding is by diversifying and offering multiple mobility services across a single fleet of vehicles. 

Leo&Go taking users beyond city limits

Diversifying will not only allow operators to acquire and retain clientele; they’ll also open up new revenue streams and benefit from better fleet utilization rates, giving vehicles a more lucrative lifespan.

By creating “blurry” mobility services – that is offering carsharing, digital rental, and even subscriptions all on the same app – both new and established operators will stay on the cutting-edge of the industry. They’ll create loyal customers by giving them what they want, where they want it – whether that be a vehicle for a minute, an hour, a day, a week, or more.

Upgrade Your Rental or Carsharing Fleet

Traditional rental and carsharing operators seeking to stay ahead in this quickly moving industry will want to power their fleets with the most advanced digital rental solutions. By taking advantage of fully customizable software to suit various business models, operators have the power to offer multiple mobility services across a single fleet of vehicles. Join the ranks of our trusted clients, the industry leaders transforming modern mobility.

Get in touch to learn more about how to optimize your fleet, open up new revenue streams and attract new customers.