Rental Car Tips 0011 – Why I Segment My Business Core into Operations, Fleet Management, Revenue & Sales, and Compliance

I look into the car rental industry and I see way too many operators running their businesses like one giant, chaotic bucket. They throw everything into the same pile: cars, customers, sales channels, compliance issues, all of it just mixed together. The result? Total confusion. Nobody actually knows what’s driving performance and what’s quietly bleeding money every single day.

From the get go I did things differently. I split my business into four distinct cores: Operations, Fleet Management, Revenue & Sales, and Compliance. Keeping them separate lets me measure metrics, manage each area properly, and hold people accountable for real results.

This industry is complicated — we all know that’s actually an understatement!  Still complication doesn’t have to mean chaos. When you blend everything together, you hide the truth from yourself and you get confused. Your overall utilization numbers might look decent on paper, but maybe one vehicle class is masking serious weakness in another. Customer service scores seem stable, but perhaps your counter staff is constantly cleaning up messes created in your turnaround operations. Segmenting your business lets you see exactly where profit gets created and where it gets destroyed.

This isn’t just my personal philosophy. The data supports this approach completely. Research published by Auto Rental News in 2023 found that operators with clear, defined fleet strategies averaged 82 percent utilization, while operators without them only hit 74 percent. That eight-point gap is literally the difference between making money and bleeding cash in our low-margin business.

Look at how the major players operate. Hertz and Avis publicly report their financials in segments that basically mirror these four cores: fleet costs, operations, revenue management, and compliance. They don’t lump everything together in one number because their investors demand clarity and transparency. Independent operators should demand exactly the same discipline from themselves, even when the only investor is you.

The choice should be straightforward for the big guys and for all-sized operators. We can either run blind, or we can run with clarity. I know that dividing my business into these four cores isn’t some theoretical management framework. It’s the only way I know to build a rental operation that can actually survive competitive pressure, scale when opportunities appear, and stay profitable over the long term, even when situations like 9/11, COVID, or tariffs throw a curveball at us.

Operations: The Customer-Facing Engine – YOUR reputation

Operations is the area where your business actually meets the customer. This is your counter, your shuttle, your ready and return lanes, your quick turnaround area (“QTA”), and the people who make everything work. Operations has to be seen as the daily performance where your brand either gets stronger or takes damage. Operations isn’t some abstract concept. It’s what renters see, hear, and experience during every single minute they interact with your company.

I measure operations in straightforward, practical ways. Take a few questions as probing examples:

How long did it take to get someone from the curb to their keys? How fast did we process a vehicle return? How many questions did our counter staff need to answer that should have been covered before the customer even arrived? How many times did we mention “free upgrade”? Did we comply with corporate processes, regulatory requirements, and best industry practices? Each of these measures whether my operations run smoothly or whether we’re making customers do our work for us.

Lot layout and QTA flow live squarely in operations too. When cars get backed up in the wash line, I know utilization is about to tank. When shuttle drivers aren’t welcoming and engaged, I know bad reviews are coming long before anyone mentions the actual vehicle – and now, AI writes those reviews at lightning speeds! Training and proper staffing feed directly into this. A great counter agent can sometimes rescue a broken system, but I don’t want my people fighting uphill battles every single day. Solid operations make their jobs easier and make my business look professional to customers.

Focus: Everything that touches the customer and your employees on a day-to-day basis. Shuttle, wash bays, R&R lanes, QTA, rental office, signage, rental agreements, processes, metrics and KPIs.

Fleet Management: YOUR Capital in Motion

Your fleet is your capital in motion, and it’s the single largest investment in your entire business, aside from your brand and reputation. If you don’t manage it with real discipline, nothing else you do will matter much. I’ve watched operators treat their fleets like parking lots, focused only on having enough vehicles to cover bookings. That approach burns through cash incredibly fast. Sometimes it backfires horrendously. When an operator needs to let a car go for $4 per day just because he has no more parking spaces left at the lot, they have a huge problem. When all convertibles are sitting on a rainy month for week, planning is simply not there.

Fleet management is about extracting every possible dollar from each unit while keeping customers satisfied with what they’re driving. I track acquisition costs, financing terms, maintenance schedules, insurance coverage, utilization rates, and resale values as one continuous cycle – and I do it on a per-VIN basis. I don’t think of cars as static assets just sitting there. They’re inventory that needs to earn its keep every single day. A car sitting idle is a pure liability eating insurance and depreciation costs. Each day a car sits at your lot is a rental day that you will never recover. A car getting overused without proper maintenance is a future lawsuit waiting to happen. The balance is delicate, and managing it properly is my responsibility.

Pro tip: Your metric is not the size of your fleet, but the available rental days in a particular period. Fill those days up!

Data keeps me honest in fleet management. I measure utilization by vehicle class, revenue per unit, cost per mile, and projected resale values. Those numbers tell me exactly when to hold onto a vehicle and when to let it go. They also reveal when I screwed up and bought the wrong mix in the first place. Keeping fleet separate from operations helps me see these issues clearly. When utilization drops, I can figure out whether the problem is weak customer demand or poor fleet allocation decisions, not just vaguely “bad business.”

I also consider insurance and compliance as integral parts of fleet management. Does my coverage actually match the risk profile of how these vehicles get used? Am I using telematics effectively to reduce losses and prevent problems? If not, I know I’m leaving real money on the table. And when it comes time to remarket vehicles, I want each car positioned for maximum return value. That means I can’t wait until the end of its rental life to think about resale strategy. I need to plan that exit from the day I acquire it.

Pro tip: Many operators track Average Revenue per Unit. You also should track your Average Cost per Unit. Do it for your whole fleet, at a per-location level, per-class level, and optimally, per-VIN basis.

Revenue & Sales: Driving Demand and Yield

Cars don’t rent themselves. Having the right fleet and strong operations means nothing if you can’t generate customer demand and price it intelligently. That’s exactly why revenue and sales should be understood as a separate core. This pushes operators to focus not just on filling cars, but on filling them at profitable rates through the right channels.

I look at revenue in two distinct layers. First is demand generation. This covers your corporate accounts, OTA partnerships, local marketing efforts, loyalty programs, and repeat customer relationships. Leave this on autopilot and your cars sit idle. Invest in it properly and you build predictable business that cushions you against seasonal fluctuations. Even just a handful of solid corporate accounts can stabilize your revenue in ways walk-up rentals never will. Look at the Enterprise case study. Enterprise built local neighborhood markets by fostering relationships with the many stakeholders and caring for them constantly. Look also into those niche operators that would only rent cargo vans, entertainment vans, or even just serve airport FBOs. All of those are built on relationships and proactive demand generation.

The second layer is yield management. This is where dynamic pricing becomes critical. Don’t chase utilization just for the sake of having an empty lot. Running at capacity with rock-bottom prices is a fast track to bankruptcy. Instead, closely watch average daily rate, revenue per unit, and booking pace – and understand timing. Are the rates in your market higher at night? How do weekend rentals impact your business? What are the highest traffic hours and curfew times for your local airport? These numbers tell whether an operator is filling cars with the right customers at the right times. Yield management isn’t some theoretical concept. It’s daily discipline that directly impacts your bottom line, and it’s based on research, math, and formulas.

Sales also includes what happens at your counter. Insurance products, GPS units, child seats, toll packages aren’t just minor add-ons. They can represent a substantial percentage of your total revenue. But I don’t treat them like cheap upsell tricks. They need to add genuine value for customers, or you risk destroying trust – and it happens oh, so often! Training your staff to present these options clearly and honestly transforms your counter from a cost center into an actual sales channel. Have you rented a car with a long-running brand? They don’t sell you CDW or SLI. They offer you peace of mind!

Compliance & Risk: Guardrails for YOUR Survival

Compliance doesn’t sound exciting (unless you are a geek, like me), but it’s the guardrail preventing your entire business from crashing. We’ve all watched operators treat it like an afterthought, something they check once annually when insurance renews or when the airport authority requests paperwork. That approach is genuinely reckless. In car rental, the risks are too significant and too constant to handle casually.

I put compliance and risk management on the exact same level as operations, fleet, and sales. This core covers so much more than insurance. Think of your rental policies, privacy policy, your rental agreements, signage, disclaimers and disclosures, insurance policies, airport concession rules, state licensing requirements, shuttle rules and procedures, accident, claim, and incident handling, consumer protection laws, compliance with authorities, regulation, codes, etc. It also includes how your staff actually follow those rules in daily practice. One single mistake, like improperly disclosing (or not) a counter product, can trigger regulatory fines or lawsuits that cost you far more than you’ll ever make from that product.

Insurance alone could fill an entire manual. Liability coverage, physical damage protection, counter product insurance, workers’ compensation, it’s all interconnected with your fleet and customer operations. When you underinsure or misclassify coverage, you might save some money short-term, but you’re putting your entire business at risk long-term. Also know that all states don’t operate under uniform rules. What flies in Nevada might be a clear violation in New York (and obviously California). Claiming ignorance won’t protect you when regulators come calling. Don’t believe that just because you’ve seen it done some way by others, that it would convince an authority or a judge.

Compliance extends deeply into airport operations too. Concession agreements contain clauses dictating everything from your signage to shuttle schedules, safety, and operation. Missing a reporting deadline or paying your percentage fees late can put your entire location at risk of losing its operating permit. For independent operators, that can literally mean losing your business overnight. Have you thought of the responsibilities associated with shuttling operations when it comes to liability?

Other aspects of compliance rest in your paperwork, especially those terms of agreements that are renter-facing. Operators often grab a boilerplate template of a rental agreement and use it as if it was an ironclad document. Well, truth is, your rental agreement, as an example, is one of the key elements to have reviewed by legal experts – those with actual car rental track record. They should be able to draft a state-specific rental agreement, bespoke to you and your operation. A rental agreement that works for your next-door neighbor might not work for you and could end you up in loads of trouble.

Pro tip: Plan before you act and learn before you plan. For example, before opening for business, did you research and understand what the best figure and structure for your company might be?  Would you be organizing an LLC or incorporating a corporation? Will you be operating as a pass-through entity or filing taxes as a C-Corp? What are the legal and tax implications of all these questions? Car rental is complicated. Study every aspect before running your business. If you are already active, go back and learn as much as you can and make any necessary adjustments. Do not cut corners!

So, Segmenting?

Yes! Break your business into four cores. It feels like creating extra management layers, but it’s really about driving success, getting clarity on what’s really happening in your operation. Each core has its own specific job, its own performance numbers, and its own risk factors. If you lump everything together, you hide problems from yourself. As you separate them properly, you see exactly what’s working and what’s broken.

Hold each core accountable using specific KPIs. Operations get measured by turnaround times, customer satisfaction scores, and operational efficiency. Fleet gets measured by utilization rates, cost per unit, and resale performance. Sales get measured by average daily rate, revenue per unit, and booking pace. Compliance gets measured by clean audits, timely regulatory filings, and actual risk exposure. Your overall operation no longer gets measured by how many cars you have, but by your final profit margin. Looking at the business this way also prevents from relying on misleading averages or gut instincts.

Segmentation also fundamentally changes corporate leadership. If know exactly who owns each core and who’s responsible for delivering results, neither my team nor I can hide behind vague statements like “the business did well overall.” We all know whether each area carried its weight or dragged performance down. That direct accountability builds real discipline and gives confidence the business can scale without collapsing under its own complexity.

The car rental industry has existed for over a century, and the operators who last are the ones who treat it with serious discipline. The largest companies —  and many others — don’t survive because they wing it or improvise. They survive because they manage their businesses in distinct pieces they can actually control, measure, and continuously improve. Independent operators and affiliates should apply exactly the same approach.

The rental business is already complicated enough. Segmenting these core functions doesn’t add complexity, it makes everything manageable. This is the only way to run a car rental business that lasts, grows consistently, and stays profitable year after year.

Until next time, here’s to smarter, safer, and more efficient car rentals!