Rideshare vs Car Rental Companies: Are Rideshare Companies Killing the Car Rental Industry?

While two rideshare companies are worth billions of dollars, Lyft have issued their IPO back at the beginning of March, while Uber is making final preparations for their own Initial Public Offering, which at the same time testifies on the growth potential of these tech companies.

However, it appears that car rental companies, on the other hand, are suffering on the cost of success of rideshare business according to the latest report from Epsilon-Conversant as more customers are switching from rentals to rideshares.

Car Rental Industry Losing Profits to Rideshare Unicorns

According to the latest report published by Epsilon-Conversant, a digital marketing company, rideshares are taking over the travel and transportation business. Based on the latest results, it appears that more than 50% of previous car rental customers have stopped using rental services, switching their focus to rideshares like Lyft and Uber.

That is how Uber and Lyft came to the status of tech unicorns in a relatively short span of time, causing loss of profit to car rental industry, while the digital marketing company s reporting that 63% of car rental customers have reduced the frequency of using car rentals, preferring rideshares.

In the period of the last two years that the report had covered, the travel and transportation business brought 140 billion dollars in transactions, of which car rentals have recorded a major loss of 3.2 billion dollars.

Lyft and Uber made up for 30% of the total amount in transactions, being a preferred transportation choice when compared to rentals in the last two years.

This might be the case because Lyft and Uber represent a cost-effective solution with an increasing demand in the last several years.

On the other hand, car rentals are still favored by older generations as much as millennials are mesmerized with Lyft or Uber services, which might provide the car rental industry with a specific demographic the business can rely on.

Lyft or Uber IPO? Reasons Why Lyft Might Beat Uber in the IPO Race

According to the term formed back in 2013 by a venture capitalist called Aileen Lee, unicorn is a startup company held privately and valued at 1 billion dollars and up. Based on the latest results regarding the IPO that came out on Friday, Lyft, an on-demand transportation company, is ranked as 1-billion-dollar unicorn.

Investors previously considered that investing in Uber’s upcoming IPO would make a more profitable and more reliable investment with significantly mitigated risks in oppose to its “smaller” competitor, Lyft, it now appears that there are more than several reasons why Lyft IPO may beat Uber initial offering in the long run.

Lyft IPO Brings a “Unicorn” Status to the Rideshare Startup

Lyft managed to double its profits in the course of 2018 and in oppose to the previous year 2017. While Lyft recorded 1 billion dollars in 2017, the company reported 2.2 billion dollars only a year later.

One of the many reasons why Lyft could be a better investment in oppose to its direct competitor, Uber, is the fact that Uber appears to be “bloated”.

Uber is also having regulatory issues, related to the fact that Uber is available in around 70 countries across the globe, while Lyft is focused on the US and Canada, having a narrowly determined targeted audience and having to deal with a leaner business model in oppose to Uber.

Since Lyft is focused on the US, the company has made sure that they are most commonly dealing with an environment which is business friendly in most cases.

Moreover, now that Lyft is a publicly traded company with its own IPO, the startup is getting more on its value, while Uber is yet to issue their IPO, that way allowing Lyft to take a head start.

In addition, Lyft also started to invest in self-driving cars, much like Uber Eats, following its competitor step-by-step in hope to surpass it with a similar but leaner business model.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.