The car rental business has a huge market worldwide, and it is growing exponentially. Given that, it is pretty natural for a local car rental business to venture out into an international market to expand the business and boost revenue. The increasing awareness of a sustainable environment and the need for cost-effective traveling are the main reasons for the increasing demand for car rental services. The global car rental industry is dominated by well-established international players, and they are expanding their business all over the world through mergers and acquisitions, joint ventures, and contracts. However, the industry is quite fragmented, and there is ample opportunity for small-scale domestic players to emerge as global car rental service providers.
Car rental business success on a domestic level could be overwhelming but taking it to an international market is a completely different ball game. There are many factors that could influence the business, such as business culture, legal systems, labor standards, economic policy, government rules, taxes, local culture, employee management, fuel prices, etc. Besides that, customers’ choice of cars for rent also varies in different geographic locations. Delivering a cost-effective ride while meeting all these requirements is a mammoth task and requires the organization to increase its operational efficiency. In the digital era, this is possible only by utilizing smart technology like the best car rental software solutions that streamline the car rental business.
This article depicts some common challenges that local car rental businesses can face while taking it to an international platform and ways to triumph these challenges.
Challenges In the International Market For the Car Rental Business
- Lack of market knowledge: Analysing the international market is the primary stage to enter into the global market. Not knowing business demand and customer expectations could turn out to be a nightmare for car rental operators.
- Cultural difference and language: Car rental operators need to design their business model to the local customer preferences and customs. Customers appreciate products or services that understand their issues like any native car rental provider. It helps them to connect with them on every level (emotional, transactional, and operational).
- Competition from local players: Business owners usually face stiff competition from local players while taking car rental business to the international market.
- International employment laws and regulations: Different countries have different employment rules and regulations. Car rental owners need to conduct their business while abiding by these rules; failing to do so could bring hefty penalties and a bad reputation to the company.
- Government rules and regulations: Car rental services need to follow government rules and regulations for that country to operate the business without any hindrance. For instance, European countries follow GDPR to safeguard customers’ data and privacy. The fines for violating these rules are very high, and no car rental operators want to add additional expense to their business. Besides that, car rental companies are also liable to pay various taxes and legal fees imposed by local government authorities.
How Can Technology and Software Solutions Help Car Rental Operators to Win the International Market?
- Research local market and competitor analysis: Extensive market research is a primary step for entering into an international market. There are various ways car rental operators can conduct market research, such as gathering information from public sources (local newspapers, community forums, survey reports, blogs), communicating with experts, collecting feedback from customers, etc. Business owners can even take the help of market survey tools for market research. But along with market research, it is crucial that car rental operators also perform competitor analysis. Car rental operators can face direct competition from local rental car companies and indirect competition from other transportation services such as public transportation, taxis, and charter cars. For competitor analysis, take customers’ feedback, track online presence, check reviews and rating sites, use competitor analysis tools, etc. Find out everything about the competitor’s business strategy, like target audience, pricing structure, weaknesses, strengths, etc. Once all this data is gathered, it becomes easy to differentiate the product or service from the competitors and add value to the service.
- Make changes for international customers: Business owners can experience a potential difference in the customers’ outlook toward car rental services while they are operating across the border. Customers in different countries gauge products from their perspective, and they see whether it fits their criteria. Failing to meet their criteria can seize car rental operators’ opportunity to get their foothold in the local market. The business owners should manage to match the local market. The car rental business has to tweak its existing business model or services such that it resonates with the local culture and lifestyle. It should elevate customer value at every touchpoint of the service and give them a comfortable ride.
- Strategic alliances: The best way to establish a car rental business in a foreign land is by forming a strategic alliance with the local players. Strategic partnerships can take place in the form of joint ventures, equity investments, or non-traditional contracts. A strategic alliance usually supports each other with their strengths and overcomes their weaknesses. In a strategic alliance, multiple factors, like clarity on objectives, transparency in the process, clear communication, etc., determine its success. For both companies to reduce the conflicts, they must measure the performance metrics and maintain transparency in the process. Again car rental software can help measure the alliance’s overall performance and establish a smooth workflow.
- Managing workforce: Managing and monitoring an efficient workforce overseas is a daunting task for car rental operators. They have to hire reliable and experienced staff to run the business effectively while taking various factors into consideration like employment law, work-life flexibility, time difference, cultural difference, etc. Also, real-time visibility in the work schedule and hassle-free communication among employees is equally crucial for car rental operators looking to take the business to a global level. There are software solutions like a remote working tool, HR management tool, talent management tool, etc., that could help car rental operators simplify various processes associated with employee management. Some of these software solutions also support advanced AI technology, IoT sensors, and cloud computing that further fine-tunes employee management activities. It gives real-time updates about the employees’ current location, the status of the job, and complete insight into the work performed. It even helps to collect feedback from the customers about the service they received from the employees or drivers.
- Customer engagement strategy: Building a customer base in a foreign land or new marketplace is a nail-biting job. It requires robust planning to target a global audience, such as mode of communication, language preference, geographic location, customers’ mindset, etc. All this information helps to localize the brand and come closer to the customers.
CRM software can be a pretty helpful tool in unlocking the customers’ behavior and interacting with them proactively. Business owners can use CRM data strategically to personalize communication and deliver better customer value. They can use this data to accelerate digital marketing efforts and create a community to know their views on business services. Besides that, car rental operators can engage local customers through mobile apps by sending them personalized messages for discount coupons and customer loyalty programs.
Conclusion
As per one of the surveys, the global car rental market is likely to reach $84.2 billion by 2026.
On-demand car rental business picking up momentum worldwide has encouraged many car rental providers to go from local to global. However, establishing a car rental business on a global level brings a unique set of challenges. It would be difficult for the local rental car operators to sustain without addressing these challenges. In addition to that, expanding the customer base overseas requires business owners to repurpose their existing business strategy and adopt advanced technologies that help them to respond to the international market. They need to be tactical on various fronts, such as customer acquisition, pricing, employee management, digital marketing, etc. If you are planning for a successful global car rental business that grows without any friction, then this article can make your job simple.
