Car rental companies try to gain scale and bargaining power

In recent years, car rental companies have gained ground in the day-to-day of the consumer, especially that of the big cities.

As a matter of habit, many of them are preferring to leave the desire of having their own car aside to rent a vehicle only when they need it or simply use the application services, which also demand units from rental companies.

With the pandemic, however, other problems also arrived, such as the global shortage of parts that caused car prices to soar.

Now, in search of a more profitable future, the sector is starting to see a consolidation phase, but in a very challenging scenario ahead.

The semiconductor crisis in the automotive industry should continue to impact the business at least until the beginning of 2023, according to experts consulted by Estadão/Broadcast.

The rental sector ended 2021 with a deficit of approximately 600,000 cars, according to the Brazilian Association of Car Rental Companies (Abla).

In this scenario, rental companies have been articulating to gain scale and bargaining power to negotiate with automakers. The biggest movement of its kind was the merger between the industry leaders, Locate (RENT3) e United (LCAM3).

The operation was approved by the antitrust agency, the Administrative Council for Economic Defense (Cade), but it still depends on the fulfillment of important obligations for its conclusion.

In the assessment of mobility specialist and director of Bright Consulting, Murilo Briganti, even though the union is not 100% completed, it is possible to say that the merger of two companies of this size will have an impact on the market.

For him, the market concentration can lead to skyrocketing in car rental prices.

The merger of Localiza and Unidas should not be the only move. Since last year, several acquisitions have been taking place, both in light and heavy vehicles, and were led by companies such as Movida and Unidas.

In addition, there was also the formation of partnerships such as the one with Volkswagen Financial Services with LM Frotas, announced recently.

Future

Briganti believes that the supply of semiconductors and other components should only fully reestablish itself in the middle of the second half of 2022, which should improve vehicle production and, consequently, stocks. “But it will take years for the price of cars to return to the standard annual growth of 2% to 3%, if it occurs,” he says.

The average ticket for automobiles in the Brazilian market went from R$ 84.5 thousand, in 2019, to R$ 112 thousand today. With stricter safety and emissions legislation and increasingly connected cars, the current price pattern is likely to remain, says the expert.

To face this cost increase in the short term, Paulo Miguel Jr., president of Abla’s National Council, says that the large rental companies are working with the so-called dynamic tariff, a concept that comes from hotels and aviation, in which prices vary by occupancy rate. “Some tariffs were readjusted from 100% to 150% due to this exceptional moment that we are experiencing, but this situation should not last,” he says.

He explains that especially after the high season, starting in February, these increases should slow down with the drop in demand.

Signature car still faces resistance

One of the trends that have been taking shape in the sector, especially after the start of the pandemic, is the offer of a paid car. However, experts point out that the reach should be limited.

The president of Abla’s National Council, Paulo Miguel Jr., estimates that only 8% of the member fleet is destined for the service. “In five years, this level should reach 15% to 20% of the total”, he says. For Murilo Briganti, from Bright Consulting, however, the cultural issue of car ownership still weighs heavily. “The theme of the car starts to depend a lot on the offers and also on the needs of this consumer. Maybe in the future, the feeling of ownership doesn’t make so much sense anymore”, he says.
The information is from the newspaper The State of São Paulo.