March 9 (Reuters) – The $100 billion Western car rental industry, brimming with cash thanks to a profitable pandemic, is phasing its electric show on the road, and Chinese-made vehicles are about to play a leading role.
The electric transition could see car fleets, long dominated by famous brands from the United States and Europe, increasingly turn to Asian automakers, according to a European executive.
“Historically, European and American manufacturers had an advantage, but the move to electric is reshuffling the cards,” said Olivier Baldassari, country group leader and chief operating officer at rental giant Europcar (EUCAR.PA).
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He said electric cars from Chinese and Asian manufacturers were comparable to Western models in terms of quality, citing Great Wall Motor’s Ora range (601633.SS), but generally cost less.
Even small savings matter in the vast rental industry, which buys millions of new cars a year – one-tenth of all new cars in the United States alone – and provides a leading indicator of broader automotive trends in society. .
Companies in the sector have long resisted the rush to electrification due to low demand for electric vehicles (EVs) among customers worried about being stranded without power.
Still, several analysts said now was the best time to start as companies bolstered their coffers with windfall profits during a pandemic that has emptied public transport and airports, and led to more remote vacations. driving.
In the United States, car rental companies received record monthly revenue of $1,320 per vehicle in 2021, according to the American Car Rental Association. That compares to around $1,000 before the pandemic.
“In the past, companies have kind of stuck their heads in the sand,” Nick Mountfield, associate partner at OC&C Strategy Consultants, which advises car rental companies, said of electrification. “We are now starting to see people saying they will have to do something and put plans in place.”
US rental fleet graph: https://tmsnrt.rs/34PGDVK
US Rental Car Revenue Chart: https://tmsnrt.rs/3JHCORx
WATCH YOUR SPEED
Hertz (HTZ.O) was an early mover last October when it announced a planned purchase of 100,000 vehicles from US pioneer Tesla (TSLA.O), increasing pressure on rivals to define transition plans.
French company Europcar, meanwhile, has pledged to make 20% of its fleet electric or hybrid low-emission by 2024, up from 3% currently, meaning it will have to buy up to 70,000 vehicles. cleaner in the next two years if it restocks its fleet to the 350,000 vehicles it had before the pandemic.
Rental companies sold their fleets as demand slumped at the start of the pandemic and struggled to regain volumes amid a global shortage of semiconductors that hampered vehicle production.
Baldassari said Europcar was increasingly sourcing electric vehicles from Great Wall Motors, SAIC Motor (600104.SS) and Polestar, which is owned by China’s Geely. [RIC:RIC:GEELY.UL] and Volvo Cars (VOLCARb.ST), although it also bought from traditional partners, including Renault (RENA.PA) and Stellantis (STLA.MI).
The company’s China strategy could change, however, if German automaker Volkswagen AG (VOWG_p.DE) manages to close its bid to buy the company in the second quarter.
Industry players operate at different speeds, each making their own calculations based on their markets.
In the United States, where many customers prefer SUV and pickup models that have yet to be electrified and where public charging infrastructure lags behind much of Asia and Europe, Enterprise Holdings is taking a more cautious tone.
Electrifying just a quarter of Enterprise’s fleet at Orlando Airport – its largest consumer rental site – would require the same amount of daily electricity as is needed to power more than 1,000 homes, said Chris Haffenreffer, Assistant Vice President of Enterprise Innovation.
Haffenreffer said the group currently has several thousand electric vehicles in North America, including from Tesla, Nissan, Hyundai (005380.KS), Kia and Polestar. Although the company said it has conversations with all global automakers, it has no immediate plans to increase that share.
“At a high level, we want to let our consumers guide us in terms of what they’re looking for,” he added. “Many car rental companies have historically taken this wait-and-see approach as we are still in the early stages of the transition.”
Graph on US industrial vehicle purchases: https://tmsnrt.rs/3gXAVnj
The varying pace of change and the timing of extensive fleet overhauls mean gasoline-powered vehicles are likely to remain the bulk of purchases for a few years to come. The transition plans of global automakers as a whole would see electric vehicles accounting for at least 40% of their sales by 2040.
Yet ultimately, the change could prove far-reaching for the fortunes of Chinese automakers in Europe, a crowded and competitive car market dominated by legendary brands that has proven elusive for them in the past.
In years past, they faced a perception that China, coupled with cheap mass production, couldn’t compete on quality. Yet those arguments are being challenged in a new reality that sees major Western automakers like BMW and Tesla now producing cars in the country, which is a tech powerhouse and the world’s biggest car market.
Great Wall Motor, one of Europcar’s suppliers, is expected to launch its Ora 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) , joining a growing number of Chinese electric vehicles. makers are trying their luck on the continent. Read more
Chinese manufacturers using the rental channel to establish brand awareness and increase sales volumes would follow a playbook Kia and Hyundai used in the 1990s to gain a foothold in Western markets, Mountfield said at OC&C Strategy.
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Reporting by Tina Bellon in Austin, Texas; Assembly Pravin Char
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