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High Tourism in Spain is causing a huge car rental shortage issue

Post pandemic, tourists have reset their travel behavior & expectations while vacationing. The latest in the news is Spain! The car rental industry is likely to see an upscale and a grinning profit after three consecutive years (of a pandemic) of revenue downfall.

car rental shortage issue in Spain | Jugnoo

The car rental industry is expected to meet surging and fluctuating demands in the market post upliftment of travel restrictions in the country. Here is a small write-up that explains possible causes of car rental shortage in the country and quick ways to capture the brewing opportunity!

The car rental industry in Spain: A brief overview

The car rental industry is overall a new vertical in the ride-hailing market. And post revenue falls during the lockdown; many existing companies in the mobility industry have shifted their business idea to one or the other vertical. The reason was obvious! (lack of tourism accounts for the lack of demand in the rental market).

The situation is such in Spain that the visitors who want to rent a car this Easter or perhaps this summer will have difficulty finding one unless they plan well in advance. Since the outbreak of the Covid-19 pandemic two years ago, there has been a car rental shortage in Spain. The issue has been brought to the fore during major holiday seasons, such as Easter. Car rental companies in Spain are increasingly displaying signs that declare “no hay coches” or “no cars,” similar to the no vacancy signs seen in bed and breakfasts and hotels.

car rental shortage issue in Spain | Jugnoo

While the car rental shortage is currently affecting all of Spain, the situation is particularly acute in tourist-heavy locations such as the Costa del Sol, the Balearic Islands, and the Canaries.

According to the Balearic Islands’ employers’ organizations, Aevab and Baleval, there are 50,000 fewer rental cars on the islands than there were before the outbreak.

A comparable issue exists in the Canary Islands. Car rental companies have been swamped with near-90 percent occupancy rates. The Association of Canary Vehicle Rental Companies (Aecav) claims to have 50,000 vehicles but estimates that they will require at least 65,000 to meet current demand.

However, looking on the bright side, the experts believe that the car rental industry is going to experience a 75% recovery this year. Sounds good! Isn’t it? With great opportunities come responsibilities. And it stands true to the car rental industry in Spain too.

Keep reading the article to deep dive into the upcoming challenges and strategies to overcome them.

Reasons for the car rental shortage in Spain

According to Spain’s National Statistics Institute (INE), fewer than 20 million foreign tourists visited the country in 2020, resulting in a 75% drop in earnings. While the number of international tourists increased in 2021, the country only received 31.1 million last year, significantly below pre-pandemic levels and far short of the government’s aim.

Due to a lack of demand, many Spanish car rental companies have revealed that their fleet is down to half of what it was before the pandemic. They further claim that they are unable to replace these vehicles because they lack the necessary dealers.

car rental shortage issue in Spain | Jugnoo

Car rental costs have risen dramatically as a result of a lack of supply and increased demand. According to the LaSexta TV channel, renting a car from Palma de Mallorca airport in July 2021 costs €880 if booked one month in advance, but the cost has since increased to €970 if booked three months in advance.

The price hike impacts the most affordable models, which, along with rising fuel prices, will make self-driving and road trip vacations in Spain much more difficult for many travelers this year.

Reasons for the high demand for car rental services in Spain

There are multiple reasons that have created a compound effect on the shortage of car rental services in Spain. In this section, we have enlisted the top reasons that fuel the shortage. 

  1. High flow of tourists

The most contributing reason is the overflow of travelers in the country. After such a long time, people have started to come out of their houses and explore the outside world. Being one of the favorite and easily accessible places, Spain has been one of the preferred tourist attraction points for all generations. Hence, the country has been seeing a tremendous number of visitors. 

car rental shortage issue in Spain | Jugnoo

The arrival of more than expected visitors is one of the key causes of the shortage of rented cars in the country. 

  1. Onset of Summers

As we discussed above, the tourists are attracted to Spain and visit the place religiously. Now, moving ahead, due to the temperature conditions and the presence of the summer season, it is difficult for them to explore the city without a car. A rented car is a smart option that can be used to explore different tourist places without getting exposed to the soaring heat.

The onset of summer has been one of nature’s contributing factors in making it tough for the car rental industry to match the supply with respect to demand. 

  1. Festive Vibes

Easter was around the corner, and people were eagerly waiting to celebrate it with great joy. The celebrations doubled post-pandemic; it seemed to be a very new feeling to connect and enjoy loudly. The preceding holidays with a complete festive mood of the people have contributed to increasing the count of visitors to Spain. And as mentioned, the industry is falling short of at least 44% of the requirements. Though it is a high earning time for the country, but due to limited sources of rented cars, it seems to be an exhaustive task for the service providers. 

  1. Asset-light traveling habits

With the shifting mindset of the individuals and the society, people are open to traveling light. More than owning any vehicle, they feel comfortable renting a car, especially for travel purposes.

This new mindset of society has been an additional factor in making the demand for rented cars exceptionally high in the market. Spain is no longer a place where travelers come with their own vehicles. Tourists are looking for cars to rent for their travel purposes.

All the reasons clearly cited why the country is subjected to a crisis in the car rental industry. Though true to speculations, authorities have already highlighted the concern to all.

Moving ahead, there is a silver lining in the crisis. The low supply of rented cars absolutely highlights the brewing opportunity of settling up the car rental business in the market. 

The above section includes why the car rental market will have unseen opportunities in Spain. If you are interested in turning these underlying opportunities into a booming business, here is a dedicated section to explain how to you. 

How to get started with this business in no time?

Looking at the existing opportunities, we can say that starting with a car rental business is an ideal deal. Now, the question arises of how to get started immediately so that there is no loss of time in setting up the business.

  • Own cars that you can rent 

First thing first, you need to own a fleet that you can rent out. If you are limited with the budget, you can start with a low fleet. It will help in keeping your services intact without putting any burden on your pocket. Based on your capabilities, you can get the count increase in the coming times. 

  • Get a car rental software

The only needed investment in making your car rental business run is to own a car rental software. Instead of going through a tiring hiring process, think about owning a car rental software. The end-to-end software is known to support all your rented car operations with optimal efficiency. Curious to know in detail?

  • Do the paperwork

Once you are done with the selection of cars and the car rental software to support the operations, it’s now time to go ahead with the paperwork. 

You can keep a check over the requirements of the particular area regarding licensing and further documentation requirements. It will help in getting the clearance to run your car rental business in the area.

  • Launch your car rental business

Post completion of all the formalities and paperwork, it is time for you to launch your car rental business in the market. You can market your presence with impeccable announcement strategies and other marketing tactics. However, looking at the need for car rental services in the area, we can say that you need not put much effort into marketing. The market is looking for such services to match the demand-supply algorithm with ease.

And you are all set to get started with your car rental business in Spain.

Choosing Jugnoo

Since we have already discussed the importance of car rental software, you must take the call beforehand. The car rental software is capable enough to handle your rental operations with great efficiency. 

Jugnoo is a renowned name that can help in solving your car rental problems/ requirements in one go. The power-packed feature suite offered by Jugnoo can help in making sure that your car rental services stay grounded in the market.

The robust and scalable car rental software powered by Jugnoo offers you fully white-labeled solutions and an admin panel to get an eye bird’s view of your business processes. You can expect dedicated apps for customers and the admin to sail through the communication gaps, track the vehicles, multiple integrations, and many more. 

Over and all, the software plays an integral role in ensuring that your services reach uninterrupted to your customers.

Wrapping Up

Clearly, there is a growing market for car rental services. If you can, you should definitely think about getting started with this business idea. Learn more with us

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