Latest / The 5G Podcast with Fexingo: Wireless Networks, Carriers, and Mobile Infrastructure / How 5G Is Quietly Transforming the Rental Car Industry
Transcript
- Lucas: So here's a number I want you to hold onto — the average rental car sits idle for about 60 percent of its life. It's parked in a lot, waiting for the next customer, while the company still pays for insurance, depreciation, and maintenance. Luna: That's a lot of dead capital sitting on asphalt. Lucas: Exactly. And for years, rental companies have tried to squeeze more utilisation out of those assets — dynamic pricing, faster turnarounds at the counter — but the car itself was basically a dumb box. You didn't know if it had a check-engine light until the customer mentioned it at return. Luna: Right, and that's where 5G changes the game. If every car is always connected, you can monitor health in real time, you can automate check-in, you can even know where every vehicle is without a GPS dongle. Lucas: Well, you still need a GPS chip, but yes — the key shift is that 5G gives you the bandwidth and low latency to stream telemetry from thousands of cars simultaneously, not just a few executive fleet vehicles. And a few rental companies are actually deploying this now. Luna: Let's talk about that. I know Hertz has been piloting something with Verizon — what's actually happening on the ground? Lucas: So Hertz, along with a few other operators, is rolling out 5G-connected telematics units retrofitted into existing vehicles. They're not waiting for automakers to build it in — they're adding a small module that plugs into the obd ii port, and that module connects to a private 5G network at the rental hub. Luna: And that's different from just using cellular on the regular network? Lucas: Right, it's a private network slice, basically a dedicated 5G core on-site. That means the data stays local, latency is in the single-digit milliseconds, and they don't compete with consumer traffic. So when a car drives into the return lot, the system knows within seconds — not minutes. Luna: And that triggers what? An automated check-in? Lucas: Exactly. Geofencing at the lot boundary triggers a handshake — the car's telematics unit sends mileage, fuel level, tyre pressure, battery voltage, any diagnostic trouble codes. That data hits the backend before the customer even parks. The counter agent gets a tablet notification saying 'Car XYZ returned, fuel full, no damage, ready for cleaning.' Luna: That is a huge shift from the current process where someone walks out, scans a barcode, manually checks the gas gauge. Lucas: And in the summer peak, that manual step can add three to five minutes per car. When you're turning a thousand cars a day at a single airport location, that's hours of labor per shift. The 5G telematics cuts that to near-zero. Luna: And it doesn't just save time — it catches problems early. If a car has a pending fault code, you can route it to the service bay before the next customer gets it. Lucas: That's the predictive maintenance angle. One rental operator I spoke with said they've reduced unscheduled maintenance events by roughly 18 percent in the first six months of their pilot. They catch things like a failing battery or a slow coolant leak through voltage and temperature trends before they become roadside failures. Luna: Eighteen percent is not trivial. That directly impacts fleet availability — which is the whole business. Lucas: And it also impacts the customer experience. You know that moment when you get to the lot and they say 'We don't have that car class available, here's a free upgrade' — that sounds generous, but it actually means their fleet management failed. 5G telematics helps them keep the right car available at the right time. Luna: Right, it's a yield management tool disguised as a tech upgrade. And I'm curious — are they using the 5G connection for anything beyond telematics? Like over-the-air updates? Lucas: Some are starting to. One of the early use cases is updating the infotainment system or the navigation maps while the car sits in the lot overnight. Previously, those updates required a physical USB stick or a Wi-Fi connection that the car might not reliably get. With 5G, you can push a 2-gigabyte map update in under a minute to a hundred cars simultaneously. Luna: And that matters because if the maps are outdated, the customer gets frustrated — and that's a brand issue. Lucas: Exactly. And the same pipe can carry security patches. Rental cars have a lot of different users, and each one might plug in a phone or connect Bluetooth. The 5G connection lets the company remotely wipe any cached data after every return, which is a privacy plus. Luna: Let me push back a little — are the economics there? Retrofitting thousands of cars with 5G modules, paying for the private network equipment — does it pencil out? Lucas: The module cost has come down a lot. You're looking at roughly $50 to $80 per unit at scale, plus maybe $10 a month for the connectivity slice. Compare that to the manual labor savings — fewer people needed at the return counter, less time inspecting cars, fewer towing calls for breakdowns. The ROI I've seen quoted is around 12 to 18 months for a large fleet. Luna: That's fast for a retrofit program. And once the cars are connected, the data itself becomes an asset. You can start predicting which models break down more often, which routes cause more wear — you can feed that back into procurement decisions. Lucas: That's actually where I think the biggest long-term value sits. Right now, rental companies buy cars largely based on purchase price and residual value. But with fleet-wide telemetry, they can start to rank models by total cost of ownership — which model has the lowest fault rate in the first 20,000 miles, which engine type has the lowest fuel variance across drivers. That's a competitive edge. Luna: And it's an edge that 5G specifically enables because you're collecting that data continuously from every car, not from a sample. The old approach of plugging in a reader during service intervals gives you a snapshot — 5G gives you a movie. Lucas: Right. And there's a consumer-facing angle too. Some companies are experimenting with using the 5G connection to let customers bypass the counter entirely — you book on the app, walk to the car, the car recognises your phone via Bluetooth and UWB, unlocks the doors, starts the engine, and the rental contract is signed digitally over 5G in the background. Luna: That's the holy grail of rental experience — no lines, no paperwork, just get in and go. And it only works if the car has a persistent, low-latency connection to the backend. Lucas: Exactly. Wi-Fi at the lot wouldn't be reliable enough — coverage gaps, interference, and you'd have to authenticate each car onto the network. 5G's private network handles that natively. Luna: So where is this actually deployed today? Is it just Hertz, or are others moving? Lucas: Hertz is the most public, but Enterprise has been testing a similar setup in a few locations, and Avis Budget Group has partnered with a telematics vendor on a 5G-enabled fleet pilot in Europe. The scale is still small — maybe 15,000 to 20,000 cars total across all pilots — but the trend is clear. Luna: And I imagine the next frontier is integrating with electric vehicles. If you have an EV rental, you need to know the state of charge, you might want to precondition the battery before the customer arrives — 5G makes that real-time. Lucas: Absolutely. EV rentals add a whole new layer of complexity — range anxiety, charging station availability, battery degradation. With 5G telematics, the rental company can monitor charge levels across the fleet and direct customers to the nearest available charger, or even reserve a charging spot for them. One European pilot is doing exactly that. Luna: It's one of those cases where 5G isn't flashy — it's not making cars drive themselves — but it's quietly making a huge industry more efficient, more customer-friendly, and more data-driven. Lucas: Yeah, and I think that's the story across a lot of industrial use cases. The sexy demos get the headlines, but the real value is in invisible plumbing — connecting the things that were never connected before, and running operations differently as a result. Luna: And if today's deep dive into 5G and rental fleets gave you something useful, consider supporting the show. Listener support is what keeps this podcast ad-free and focused on the actual substance. You can find us at buy me a coffee dot com slash fexingo. Lucas: Appreciate that. And like Luna said, it's a small gesture that makes a big difference for us. Now, back to the cars — one thing I didn't mention is that the 5G module also acts as a mobile hotspot for passengers. Some rental companies are starting to offer that as a premium feature, which is another revenue stream. Luna: Interesting — so the same hardware that improves fleet operations can also be sold to the customer. That's a nice double dip. Lucas: Exactly. And it's not just a hotspot — because it's a 5G connection with a dedicated slice, the rental company can guarantee a certain bandwidth for the customer while still using the same radio for telemetry. Network slicing makes that possible. Luna: So you get operational efficiency, predictive maintenance, automated check-in, over-the-air updates, and a new revenue stream — all from adding a $60 module and a private 5G network. That's a pretty compelling package. Lucas: It is. And I think in two to three years, not having a 5G-connected fleet will be like not having a website — it'll be a competitive disadvantage that's hard to overcome. Luna: Well, on that note, I'm curious to see how the economics evolve as more sellers enter the telematics module market. But that's a topic for another episode. Lucas: For sure. For now, it's one more industry where 5G is quietly doing the heavy lifting.