Rental car giants embark on electric after pandemic bonanza

The $100 billion Western rental car industry, flush with cash from a profitable pandemic, is gradually getting its electric show on the road, and Chinese-made vehicles are poised to play a starring role.

The electric transition could see car fleets, long dominated by famed marques from the United States and Europe, increasingly switch towards Asian automakers, according to a European executive.

"Historically, European and American manufacturers had an edge, but the shift towards electric is reshuffling the cards," said Olivier Baldassari, group chief countries and operations officer at rental giant Europcar.

He said electric cars from Chinese and Asian makers were comparable to Western models in terms of quality, citing Great Wall Motor's Ora line, but generally cost less.

Even small savings are significant in the vast rental industry, which buys millions of new cars a year - a tenth of all new cars in the United States alone - and provides a leading indicator of wider auto trends in society.

Companies in the sector have long resisted a rush to electrify because of weak demand for electric vehicles (EVs) among customers worried about being stranded out of power.

Yet several analysts said now is the best time to start as companies have fortified their coffers with bumper profits during a pandemic that emptied public transit and airports, and led to more holidaying within driving distance.

In the United States, rental car companies received record monthly revenue of $1,320 per vehicle in 2021, according to the American Car Rental Association. That compares to around $1,000 pre-pandemic.

"In the past, companies have kind of stuck their head in the sand," said Nick Mountfield, associate partner at OC&C Strategy Consultants, which advises rental car companies, said about electrification. "We're now starting to see people say that they'll have to do something about and put in place plans."