The coronavirus global pandemic has had a devastating impact on the car rental industry. This is the case because of the interrelated nature of the tourism industry. When the tourism industry suffers losses many other related industries also suffer. This has been the case for the car rental industry as other industries which surround the car rental industry have suffered. If people are not going on holiday they are not renting cars to go to those holidays. The car rental industry suffered billions of dollars of lossed potential revenue due to the coronavirus pandemic. This has led to severe lay-offs and a disposal of non-core assets. The pandemic also resulted in market volatility, rating downgrades and notable loss of share value even for leading car rental companies.
The car rental industry had to sell off a large portion of its fleet to avoid bankruptcy and other negative financial repercussions. This resulted in an issue when demand for car rental services returned sooner than expected. Car manufacturers were unable to produce cars at pre pandemic levels due the global shortage of microchips. This in turn meant that car rental companies could not replenish their fleets at the pace they were expecting to be able to. Therefore car rental companies had to charge more for their cars than they had previously with their smaller fleets. This is set to be unlikely to change as car rental companies are able to generate profit despite the reduction in fleet size.
The Russia-Ukraine war has had a significant impact on the global oil price. This is due to the heavy sanctions which much of the world has imposed on Russia, one of the world’s largest oil producers. As a result of the reduction of supply and stable demand the price of oil increased significantly. This has negatively affected the car rental industry as prices for petrol and diesel have increased which in turn increase the cost to both the consumer and the car rental industry. Such increases have deterred consumers from renting cars and instead considered other transportation options such as public transport or ride sharing.
The car rental industry has made a resurgence in the summer months and this has largely been attributed to the widespread uptake of the vaccine. As more and more people take the vaccine, the travel industry is able to make more of a recovery as the safety issues of travel are mitigated by the protection which the vaccine provides. This uptick in turn benefits the car rental industry as the tourism industry is a web of interrelated sub industries, one of which being car rental. As more people go on vacation more cars will be rented and this will assist greatly in the car rental industry recovering to pre pandemic levels.
Vaccine hesitancy is preventing the US from being able to declare coronavirus a thing of the past. As much as 17% of the adult population in the US is opposed to taking the vaccine. This large segment of the population is preventing the country from being able to return to life as was experienced before the pandemic. Countries such as Denmark and Sweden have declared themselves done with covid as their populations have been all but fully vaccinated. This has in turn boosted the domestic tourism industry in these countries as no travel restrictions exist. This in turn benefits the car rental industry as more travel leads to more car rental.
With much happening in the world a car rental business owner should be wary of the many risks which are at play in the industry. Pandemics and warfare aside there are many everyday dangers to be on the lookout for. These risks can largely be mitigated by the right insurance policies. A general liability policy will be the best option to protect your car rental business from the commonplace risks associated with operating a car rental business. For more information The Really Useful Information Company (TRUiC) has many detailed resources available for car rental business insurance requirements. They also have more advice related to which policies are best suited for car rental businesses.
The coronavirus pandemic has had an overall negative impact on the car rental industry as far fewer people have been traveling due to restrictions on movement and due to the health risks associated with travel. Thankfully the vaccine has led to a resurgence of domestic travel in the US as well as the usual summer boom of tourism. Unfortunately, the recent war in Ukraine has negatively impacted the car rental industry as it has led to an increase in oil prices. This has the potential to dissuade consumers from using car rental companies as they will have to spend more on fuel than they would have in the past. Overall it has never been a better time to be properly insured as a car rental company.