It’s no secret that the rideshare business, like the rest of the travel business, is in a downturn from the relentless assault of COVID-19. Uber reported losing $1.02 per share. Lyft, which will report next week, is trying something new; a partnership with European rental car company SIXT .
In general, Uber and Lyft seem to be following different strategies. Uber looks to be building a broader platform including delivery “where transportation is just one offering among many, and where users and drivers can pivot from one service to another as demand shifts.” Indeed, while Uber posted a larger than expected loss, the real news was that “Uber’s delivery business is now larger than ridehailing.”
Lyft, on the other hand, seems to be on building a marketplace based on transportation. Hence the new partnership between Lyft and SIXT that will let Lyft riders rent a car through the Rentals tab in the app.
When users open the Lyft app, they’ll see a selection of cars from Lyft and SIXT available directly from the Rentals tab. At booking, they can select vehicle class, reservation dates, location, and any applicable extra-cost add-ons. After inputting reservation details customers have the option to add insurance coverage. Within 30 minutes of the scheduled pickup time (say while taking a Lyft to the SIXT location) they can select the exact make and model vehicle to drive off the lot .
Your rental car won’t come to pick you up, but once on the SIXT rental lot, Lyft says they’ll be able to expedite the rental counter experience. Lyft is even throwing in a $10 Lyft credit to get users home after they drop off the car.
The partnership gets underway this month in Seattle, Las Vegas, and Miami, expanding to all cities in the US SIXT rental network in the next few months. The deal with SIXT (which has a commission structure) expands on Lyft’s in-house rental car offering that began in 2019, and adds to the other Rentals available from the Lyft app like bikes and scooters.
Lyft says the rental car option doesn’t compete with rideshare,, but adds the flexibility to offer urban rental cars for occasions when rideshare isn’t appropriate, from shopping expeditions to moving to family vacations. As a Lyft spokesperson pointed out, car ownership is costly form of transportation for many, although during COVID there’s been an increased demand for rental vehicles.
“Renting a car should be as easy calling a Lyft.” says Cal Lankton, VP of Fleet and Global Operations at Lyft. “Instead of having to search through rental aggregators, people can just hit the Lyft app.”
“Lyft is moving beyond what most people think of rideshare app,” Lankton adds. “With Covid concerns, people want easy friction free rentals.”
Lankton, who worked on Tesla’s supercharger team before coming to Lyft, wants to change the traditional airport rental car nightmare of “jockeying for position on the rental car shuttle bus—who’s going to jump first and run for the counter”
Lyft’s partner, SIXT, is little-known in the US, where it has about 85 locations and just 2% market share. SIXT, however, is one of Europe’s largest car-rental companies, with revenue last year of $3.7 billion.
“We’re now over a quarter million cars around the world,”says Sebastian Birkel, President of SIXT US. “Just as we’ve become a market leader in Germany, our vision is capturing market share from the big guys.” SIXT started in the US in 2011 and now has over $500 million in revenue. Birkel says the company’s ‘special sauce’ is renting higher-end cars like Volvos, Mercedes, Lincolns and Cadillacs at reasonable prices.
The pandemic has been hard on car rental companies. with both Hertz and Advantage declaring bankruptcy. “A lot of our competitors struggled even more than we do,” says Birkel. “The crisis functioned as a catalyst.”
When Advantage Rent a Car filed for bankruptcy in May, SIXT got court approval to take over ten of Advantage’s airport locations for $16.1 million, including New York’s LaGuardia, Kennedy, and Newark; Boston Logan, Denver International; Houston Bush Intercontinental , plus Orlando, Hawaii and busy McCarran in Las Vegas. SIXT now has a presence in the 30 biggest US airports, plus 55 urban locations in large markets like Manhattan, Miami and Los Angeles.
Still, “How do you get your name out there?” Birkel muses. For SIXT, the answer is two-fold. “To grow as fast as we can so people see us, and through partnerships—we want to serve as a mobility provider as Lyft does.”
Was the partnership driven by the advent of the coronavirus, and its impact on both rideshare and rental industries? After all, studies say more than 50% of Americans say won’t be comfortable using ride-share and other shared services until there is a vaccine. By adding a rental option, Lyft is offering customers a car that’s their own for the time they rent it, not one shared with rideshare passengers.
The partnership was set up before COVID-19, but it came in handy in the current environment, says Birkel. While he says SIXT has long experience in cleaning and disinfecting vehicles, he prefers to talk about the future. “We’re planning for the normalcy that’s going to come.”
To Lankton, the partnership unites “best in class digital experience plus best in class vehicle experience. By working together we can create a lot more valuable experience.”