The Utilization rate of Car Rental segment in United Kingdom, attained a value of 80.33% in 2023
The indicator recorded a historical change (bps difference) of 3,795 bps between 2020 to 2023, and is expected to grow by...
GlobalData projects the figure to change by...
Global vehicle utilization and fleet size
Poor Utilization rate creates a buy or sell predicament for car rental companies
Rental utilization is the ratio of rental days to the total number of available rental days during the year. In 2020, the global utilization rate performed extremely poorly, with rates falling by a significant margin. The worst performing regions were the Middle East and Africa, which saw their utilization rates fall drastically.
The impacts of poor utilization rate will directly impact revenues and overheads. Much like a hotel, each day an asset (in this case, a vehicle) is unused, it is considered lost revenue and affects business performance. Poor utilization rates make car hire companies less reliable to invest in, reducing business capital. This is particularly problematic for large publicly traded companies like Avis, Hertz and SIXT. As such, major car hire companies have moved to sell their assets. Companies such as Europcar have flexible leasing models which help them scale their fleet according to demand, allowing them to sell off unwanted assets quickly, reducing costs and creating more cash flow which is essential for survival during the pandemic.
However, as demand increases, companies are struggling to refill slots with new vehicles due to the supply shortage in the pandemic, forcing car rental companies to buy used cars. While this is a short-term solution to meet demand, it will undoubtedly impact the quality of the customer experience.
Impact of COVID-19 in UK car rental sector
The UK car rental market has seen a decline in 2019 and 2020, but a particularly strong decline by a significant margin in 2020 as a result of the COVID-19 pandemic. However, strong growth is expected in the upcoming period as the market recovers.
Who are the leading players?
Europcar Mobility Group (Europcar) is a provider of integrated mobility services. The company offers a wide range of car rental or leasing services, including vehicle rentals on a short-term basis, low-cost rental services, carsharing, and booking services through its fleet of cars, vans, and trucks.
Avis is a provider of car and truck rental and car-sharing services. It offers car rental services to the premium, commercial, and leisure segments of the travel industry. Avis Budget also operates as a rental car supplier to price-conscious travelers. The company operates through various brands including Avis, Budget, Zipcar, Apex, Maggiore, France Cars and Payless.
Company profile
Sixt SE (Sixt), a subsidiary of Erich Sixt Vermogensverwaltung GmbH, is a provider of integrated mobility services. The company offers vehicle rental services to corporate and individual customers. It also provides limousine service, budget rental service and used vehicle sales service. Sixt also provides finance leasing, fleet management, vehicle maintenance, service packages in the case of accidents, and fleet consulting. Sixt offers the mobility services through an app, SIXT. The company maintains partnerships with major airlines, marketing associations and hotel chains. The company has operations in the US, the UK, Germany, France, Spain, Italy, Austria, Switzerland, Belgium and the Netherlands. Sixt is headquartered in Pullach, Munich, Germany.
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