Avis Budget Group may need to whip out its old “try harder” advertising slogan to convince Wall Street that the rental car business is still relevant.
Who needs to rent a car when you can just get an Uber or Lyft to where you’re going? That seems to be what investors are asking. Avis and its fitting CAR ( stock ticker are down nearly 25% this year. Rival )Hertz ( has plunged more than 35% so far in 2018. )
That’s an overreaction, says Avis CEO Larry De Shon. He told CNNMoney that rental car companies won’t be going away anytime soon. In fact, he said that many of the same trends that have helped Uber and Lyft in big cities are giving Avis a boost too.
De Shon noted that for many urban residents, having a second car is not really a great option. They can get by with one, even if it is a tiny sedan as opposed to a tank-like SUV.
But what happens when a city dweller wants to leave town for a trip to the beach or camping in the woods?
“If you have a long weekend when you want to get away, you have to rent a car,” De Shon said. “Our average rental is four days and 450 miles. That’s not an Uber experience.”
De Shon said that people aren’t renting Avis cars for quick one-day excursions. Those kinds of short-term trips account for only 3% of the total rental business at Avis.
“Our clients use our cars. It’s the sales person on the road going from one city to next or the leisure customer with children, car seats and lots of luggage,” De Shon said.
Still, Avis has made some forays into the ride-sharing business. It bought Zipcar, the company that lets people rent cars for as little as one hour, in 2012.
De Shon said that Zipcar is now available in several international markets and at more than 500 universities as well.
Zipcar has adapted its offerings too. In addition to letting people pick up a car and return it to the same spot they got it, Zipcar also now lets drivers drop off cars at a different location if that’s more convenient.
Avis also has a partnership with Waymo. the self-driving car subsidiary of Google owner Alphabet (. Avis will provide maintenance services for the fleet of vehicles Waymo has in Phoenix. )
“We have been working hard on modernizing our business,” De Shon said, adding that the company is also partnering with Toyota and other auto manufacturers so it can add more connected cars to its fleet — vehicles with mobile technology such as the ability to check the odometer and fuel gauge on a smartphone app.
The Avis app can also be used by customers to check in and choose a car quickly at the rental location. In other words, Avis is hoping to avoid having long lines of tired customers who just got off a plane waiting to get their car at the airport.
Avis also just announced an expanded deal with Amazon that will let consumers book a vehicle via Amazon’s voice assistant Alexa — and Avis will give those customers an Amazon ( gift card for doing so. )
All that leads to happier customers, De Shon said.
“We’re focusing on product offerings that are relevant to today’s consumer and makes the rental process more simple,” De Shon said. He added that Avis asked customers for suggestions on how to best design the Avis app — and that customer satisfaction is higher when reservations are done through the app.
This should boost profits too. Analysts are expecting an earnings increase of nearly 25% this year.
Now Avis just has to convince investors that all these efforts are paying off.
CNNMoney (New York) First published July 20, 2018: 9:10 AM ET