These are turbulent times for the renting business, but companies in the sector continue to work to respond to the needs of users.

Although the business has suffered from a lack of vehicles, it has countered it with a great deal of management effort, helping customers choose vehicles with shorter lead times and higher availability.

The context was and is complicated, "but in 2022 it was possible to reap the fruits of the work of renting firms and, above all, of their human capital," says José-Martín Castro, president of the Spanish Association of Vehicle Renting (AER).

Last year was complicated by the lower number of new vehicles derived from the semiconductor crisis, which lengthened waits and affected customer generation.

In spite of everything, professionals in the sector pulled strategy and craft to continue increasing their penetration (they already account for 27% of registrations) and expand market share, although at a slower pace.

ADVANCES. Specifically, the renting business dismissed 2022 with an advance of 7.1% in the supply of vehicles, to 853,644 units, and a growth of 3.9% in customers, to 258,527 contracts.

These figures could have been better if the number of vehicles available on the market had been higher, but the industry has done everything possible so that its users did not see their mobility interrupted. "We have all been patient in not easy circumstances," as Castro summarizes.

Looking ahead to this year, AER expects the renting car fleet to expand by at least another 6% and the number of customers to increase by 5%. From the specialized company Alphabet share these good forecasts, supported by the registrations registered during the first two months of 2023, which accumulate a growth of 40.8%.

"Customers want the flexibility of renting and we are convinced that the growth of the sector will be greater in the future," they predict in Alphabet. For his part, Manuel García, general secretary of the Spanish Association of Leasing and Renting (AELR), observes a slow and constant growth of the sector, called to remain in a scenario of regulatory uncertainty, but also technological and economic.

The situation described above provides favorable conditions for long-term vehicle rental to continue growing, despite the fact that the sector has not benefited from the problems of the automotive industry to supply the market for new cars.

"Rather it has been the opposite, because we havesuffered shortages and significant delays in the deliveries of vehicles," laments the director of the AELR.

PARTICULAR. In the good moment that renting is going through, the change registered in the profile of users has had a lot to do: individuals already exceed companies: they account for 52% of contracts, compared to 47.9% of companies. These figures show that it is no longer only the corporate world that enjoys this mobility option.

Both individuals and self-employed professionals continue to gain in importance. These small customers represented only 2015.2% of renting users in 3, but in 2022 they already accounted for 16.3%.

Another novelty: SMEs are also being encouraged to use this formula more and more, having gone from a share of 15.3% in 2015 to another of 23.1% in 2022

INFLATION. Renting is falling because companies in the sector are sharpening their ingenuity so as not to pass on to their customers the increase in prices derived from the inflationary situation.

In fact, in many cases they are assuming much of that increase in costs. This has allowed renting not only to face the difficulties, but is even emerging stronger.

ALD Automotive believes that 2023 will be the year of definitive recovery, when pre-pandemic levels will finally be reached. Antonio Cruz, deputy general manager of this company, explains that the expected growth will be more sustainable, flexible and digital.

"We will continue to promote the electrification of the vehicle fleet, paving the way for collaborative economy initiatives and offering value solutions for our customers," says Cruz.

In ALD they also maintain that the concept of usability will take on renewed importance this year, so they expect that the renting of second-hand vehicles will continue to grow, thus providing a second life to vehicles after the end of rental contracts.

FORTRESS. Another company that realizes the good prospects for renting is Northgate, which in 2022 has increased its fleet by 8.4%, "which represents an increase 1.3% higher than that of the sector," says Eduardo González, Commercial Director of the firm.

"We adjust to the needs of our customers and give them freedom of deadlines, which is supported by the results obtained," he adds.

For now, Northgate has opened this year with 60,000 vehicles of leased fleet, a milestone for the company. And in Arval they have also taken advantage of the good moment of the sector, with an increase of 8.3% in its global fleet, which already exceeds 1.5 million vehicles.

"Arval Spain has been one of the main players in the growth of the group, with 211,828 vehicles financed, which are 13.3% of the global fleet," they point out from the French company.

CONTRACTS. These good omens from firms in the sector do not ignore that both the shortage of semiconductors and the limitations in the global supply chain will remain throughout this year, as well as delays in the delivery times of new cars. Therefore, as they warn from Arval, "2023 will be a year to accompany and advise clients closely".

In particular, the current context favours contracts of a shorter and shorter duration, with three and a half years currently predominating. "Customers are

looking for greater flexibility that allows them to change vehicles more easily, according to their needs", explains José Ramón Calvo, CEO of Alquiber.

"We detected a boom in customers who demand our services. But this is not only because there are people waiting to receive the vehicles they have bought in property, "clarifies Calvo. And he continues: "When the vehicle is another work tool you cannot afford to stop the activity and, therefore, more and more companies opt for flexible renting".

This growing demand for variable durations has led to a proliferation of users who until recently did not contemplate renting as an option.

However, currently they are willing to "pay for the service when they need it" and without the need to "assume the extra costs of having a vehicle stopped", as Calvo recalls.

SUSTAINABILITY. Renting is not only profitable for more and more people, but also makes them aware of the need to use more environmentally friendly means of transport.

That is why electrified vehicles already account for 8.6% of registrations in the sector. And also, that 24% of long-term rental cars already sport the ECO and CERO labels, which distinguish hybrid and electric vehicles.

The legislation also supports car rental

Reducing transport emissions is one of the main concerns of the Spanish authorities. And also, one of the reasons why the entry into force of the future Sustainable Mobility Law seems a matter of time.

This new regulation, already supported by the Council of Ministers and awaiting parliamentary processing, aims to reduce the environmental impact of travel based on four fundamental pillars: making mobility a social right, favouring the transition towards a clean and healthy model, creatinga digital and innovative transport network and, In short, to make a strong investment that improves the service received by the citizen.

While it is true that public transport will play a fundamental role in this change of model, renting seems like a key figure to respond to all the challenges posed by this new standard. And it is that one of the most outstanding points of the text is the obligation to incorporate a sustainable transport plan to work in companies with more than 500 workers.

"The companies that have incorporated these plans have verified the benefits they generate, both for employees and for mobility linked to the work environment," says Oriol Ribas, of the Spanish Association of Automobile Fleet Managers (Aegfa). "Renting is already the mode of transport with the most penetration in large companies and more and more SMEs, freelancers and individuals are betting on this formula".

From Aegfa they do not consider that the regulations will produce major changes, because the degree of insertion of renting in the business world is already quite high. However, companies in the sector are creating new services that are better adapted to the needs that this standard will generate.

For example, MasQRenting is adapting two of its products aimed at companies. Specifically, it is strengthening both its flexible renting service for low-emission vehicles that can circulate in restricted areas of large cities, and corporate carsharing.

The operation of this modality is very simple, as explained by María Martínez Carrillo, CEO of MasQRenting: "Companies hire a series of vehicles that have carsharing technology, and have them at their headquarters available to their employees, who through an online platform make their reservations".

DIGITALIZATION. Services such as the one mentioned respond to another of the great challenges posed by future regulations: undertaking the technological transformation of mobility services. Some companies have come a long way in this regard, but others still have a long way to go.

"There's still a lot of fleet management that is done through spreadsheets. And it is not always easy for the professional of the sector to convince the management of the company of the importance of having this type of tools, "says Ribas. "The doubts vanish once they verify the results and benefits offered by the technology. Digitalization is unstoppable, also in fleet management."

The objective of the companies is the total electrification of their mobile fleets in the medium and long term. That is why hybrid vehicles or vehicles with ECO label are increasingly requested by leasing companies. And motorcycles are also beginning to gain prominence, which can become a vehicle that helps meet the sustainability goals that the new legislation will mark.

MasQRenting also has rental motorcycles and, as its CEO explains, "many are already electric, which fulfills the first pillar to help labor mobility." And he adds: "Distribution and home service companies are the great beneficiaries of this type of renting."

Other firms are focused exclusively on the rental of motorcycles for individuals. This is the case of Momoven, whose CMO and co-founder, Pablo Carceller, explains that "the growth forecasts of motorcycle renting are 2000%". And he concludes: "This is due, in part, to the fact that they pollute less than cars and favor a more agile circulation."

HYBRIDS LEAD THE ELECTRIFICATION OF THE BUSINESS

An advertisement for a major German car brand asked in 2011, while showing beautiful landscapes plunged into a relaxing silence: Do you like to drive? But, in reality, at that time the sound of combustion engines did not allow you to fully enjoy that silent experience that electric vehicles already provide today and that more and more renting users have begun to enjoy.

The 2023 Global Automotive Consumer Study, conducted by Deloitte, notes a growing interest in green cars. According to data collected by the consultancy, 65% of Spanish users would opt for an electrified vehicle if they had to buy a new car. Specifically, 33% would opt for a normal hybrid, 19% for a plug-in hybrid and the remaining 13% for an all-electric model.

And this trend is not exclusive to the buying and selling market. Cars powered by alternative energies accounted for 2022.32% of car registrations in renting in 1. The figure has increased almost 3% in one year, according to the Spanish Association of Vehicle Renting (AER).

This boom has occurred in a context of rising inflation, which during the last two years has increased the price of renting vehicles with an ECO environmental label – models that use some hybrid technology – by up to 14%, as recalled by Eduardo Clavijo, CEO of the Idoneo.com platform. In fact, renting already manages 70,000 electrified vehicles, which means that 8.2% of the Spanish renting fleet are ecological.

This growth responds to the interest of users to protect the environment, but also, because "consumption, which is much more efficient" prevails. This is recognized by Saúl Alonso, Marketing Director of Bipi, a Spanish start-up specialized in subscription vehicles.

The increase in the supply and demand of electricity in renting is due to several reasons, which are added to the tax advantages offered by this modality to freelancers and individuals. As Alonso explains, "it eliminates the barriers to entry to these vehicles, since it is not necessary to make large outlays" to be able to have one, whose price is high. In addition, the renting of electrified vehicles has the added advantage that the user saves the forced change at least once of the battery, whose cost generally exceeds 7,000 euros.

REGULATORY CHANGES. The restrictions on private cars in cities also explain the good moment of electric cars, says Alonso. "The constant regulatory changes in large cities are pushing users towards these types of vehicles."

And the fear of regulatory changes is diluted in the case of electric and hybrid subscription. Users "see in them the opportunity to have a car that adapts to all regulations for flexibility when changing vehicles," says the Bipi spokesman.

Within the segment of electrified cars, non-plug-in hybrids powered by gasoline stand out. Last year they ranked third in the registrations of the renting business with 43,500 units, 21.8% of the total of the sector.

BOOM OF PLUG-INS. Gasoline-powered plug-in hybrids approached 2022,16 registrations in 000 and accounted for 6.2% of all those made by renting. Thus, for Alonso, it is confirmed that "more and more users are betting on the electric car and, above all, on plug-in hybrids".

Behind were the non-plug-in hybrids powered by diesel, with just over 5.2% of registrations. As for the models, the Bipi expert explains that "hybrid and plug-in hybrid SUVs are currently the most demanded".

THE CONNECTED VEHICLE MAKES DRIVERS FALL IN LOVE

Leasing companies have always led the digitalization of motorized mobility. Not surprisingly, they have been pioneers in launching the main innovations of the automotive industry.

The sector has sought to respond to new market demands and offer more efficient solutions to its customers through advanced safety solutions (such as driver assistance systems or cameras and sensors that help prevent accidents) and the incorporation of connected and electric vehicles into its catalogs.

Telematics systems, big data and digital platforms have become the advances with the greatest potential. As explained by Clara Santos, Deputy General Director of the Operations and Systems Area of ALD Automotive, this is a consequence of the fact that, "in addition to facilitating the procedures and streamlining the necessary procedures derived from the use of the car, they favor the inevitable digitalization of driving and safety".

As disruptions such as telemetry and artificial intelligence have made their way onto the roads, car rental companies have made their hallmark through comprehensive fleet management solutions. For example, Santos says, ALD has a tool that allows you to control all kinds of parameters from a mobile device and in real time. These include professional and private mileage, fuel consumption, vehicle location, carbon dioxide emissions, driving hours or driving behaviour. "This system, which seems similar to black boxes, increases driving efficiency, reduces operational costs and improves safety," he argues.

The control of fleets through these technologies has been gaining ground in Spain in recent years. In fact, the Arval Mobility Observatory 2022 revealed that 43% of national fleets already incorporate telematics tools or connected car solutions, while only a third incorporate them in the rest of the European Union.

As explained by Arval, thanks to these innovations it is already possible to say that vehicles are "connected devices". Not only in favor of the driver, but also of the fleet manager, who can monitor "quickly and easily through a device installed in the car" and thus "make decisions aimed at increasing driver safety, reducing accidents or minimizing mileage deviation through route control".

It is more difficult to know when the autonomous vehicle will be a reality in Spanish fleets. Even more, after Tesla (the company that champions its development) has just announced the withdrawal of 363,000 cars in the US due to a problem in its autonomous driving software.

These systems are not allowed in Spain, so the announcement has had no impact. However, companies like Arval, which already have models of this type, explain that in general it is not necessary to remove them from circulation to update their software: "The connected car detects that an update is available and asks the driver for permission to install it." However, there are times when the update must be made at the official dealership, as has happened in this case with Tesla cars.

TRACEABILITY. Renting is also betting on solutions linked to traceability through GNSS antennas, more accurate than GPS when using several satellite signals. Eduardo González, Commercial Director of Northgate, includes this technology among the great novelties of his company, as well as the new version of its fleet optimization system, "simpler and customizable" and whose hiring has grown by 24%.

According to González, the renting user asks for simplicity and flexibility and firms such as Northgate respond by facilitating omnichannel, either by offering 100% digital contracting or communications through WhatsApp. At the end of the day, he concludes, "we must bet on technological advances for the improvement of internal processes, which allow a much more personalized experience".

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