Management of Risk Factors in the Rental Car Market

Abstract

The car rental sector is a dynamic and rapidly growing business sector, which is important for both the development of the automotive industry and consumer mobility needs. In the rental car market, risk management becomes an essential factor determining the success and long-term growth of business operations. Risk factors inherent in this sector, such as the technical condition of cars, customer behavior, economic conditions and the legal environment, require a structured and efficient management that would allow companies to make the most of the available opportunities and to minimize threats. The purpose of this article is to examine the risk management of car rental and evaluate the impact of a 5–10-year-old car rental model with reverse logistics on risk reduction and business efficiency. The article examines the methods of the risk management process, presenting the methods of risk identification, assessment and reduction, as well as the possibilities of applying reverse logistics in the car rental sector. The results of the applied expert method of quantitative research and the conducted questionnaire survey revealed the factors that are most important for a company that renews its fleet of vehicles. These are the price, operating costs, sustainability, and environmental friendliness, with sustainability being the top priority. Companies can benefit from the research results when making decisions about the renewal and optimization of their vehicle fleet. It was concluded that implementing reverse logistics in the car rental sector will increase company profits and reduce pollution.

1. Introduction

Rental cars are vehicles that people can use for a certain period of time (usually from a few hours to a few weeks) for personal or business purposes at a certain fee. This business model has become very popular in recent years as many people have chosen to rent as an alternative to buying. Rental cars offer flexibility and convenience, allow to try different makes and models, do not require long-term financial commitments and relieve renters of the ongoing costs of car maintenance.

Customers can choose from a wide range of vehicles, including compact cars, SUVs, vans and luxury vehicles, and pay a fee depending on the length of the rental period and the type of the vehicle they choose. Arias-Molinares et al. [1] state that the aim of car rental is to provide a convenient, flexible and cost-effective transport option for people who do not have a car or who need a temporary vehicle for a specific purpose.

Rental service refers to the provision of the right to use the goods for the customer, and do not need to have ownership, such as the car rental industry, is now growing rapidly. This service is provided to avoid the so-called “customers to bear the burdens of ownership”, such as the product has to take the risk and responsibility. However, the use of issues such as risk perception and subsequent customer facing to obtain the ownership of the products of leasing services need further study. Based on the theory of risk perception, authors propose five risk dimensions (economic risk, performance risk, psychological risk, time risk and social risk). The results proved that the decision of customer to obtain the ownership is affected by the five kinds of risk perception factors; while the ownership intention declines, the intention to use rental service will increase [2].

It is important to underline that car rental is a very risky industry, as cars require a high cost of fixed assets to be renewed quickly, which increases financing difficulties, high capital costs and financial risks. In addition, the mobility of such a service makes it impossible for the car rental company to control the time and space of its operations. In addition, fraud is common, due to the lack of a sound legal framework and the lower morale of some customers. Car rental is classified as a service in the transport industry, in which cars occupy a central position [3].

The car rental market is complex and dynamic, while effective risk management is the key challenge faced by car rental companies. The sector faces a variety of risks, including operational risks related to owning and operating a vehicle fleet, financial risk related to fluctuations in demand and prices, or regulatory risk related to compliance with data protection and insurance laws. Effective risk management is essential for car rental companies to ensure the long-term viability and success of their business. By identifying and managing risks, companies can minimise the potential impact of losses and ensure that they can respond effectively to changing market conditions. One of the main challenges of risk management in the car rental market is the need to combine risk mitigation strategies with the need to maintain competitiveness and profitability. Companies need to strike a balance between investing in risk mitigation measures, such as insurance coverage and security systems, while maintaining cost-effectiveness in order to remain competitive in the market. Another challenge is the need to keep abreast of changing market conditions and regulatory requirements. The car rental market is subject to rapid change and disruption, and companies need to actively monitor these changes and adapt their risk management strategies accordingly. In summary, risk management challenges are an essential aspect of the car rental market, and companies need to take a proactive and strategic approach to risk management to ensure the long-term success of their business.

Risk management has become an important component of modern business operations, especially in the context of rapidly changing market conditions and technological advances. According to Lamine et al. [4], risk management in the activities of companies is a crucial process that provides an advantage to operate more efficiently and to remain competitive, ensuring favourable operating results.

Insurance risk is one of the main costs of car rental companies [5]. It is often observed that insurance is much more expensive for rental companies than for an individual. This is related to a higher level of risk that rental companies face as a result of intensive use of cars and the number of renters. According to Queirós and Oliveira [6], one of the strategies that some rental companies may use to reduce insurance costs is to rent older cars. By choosing 5–10-year-old cars, they can reduce their initial investment in car purchase, thus reducing insurance costs.

2. Materials and Methods

2.1. Risk Management Methodology

Scientific literature offers many difference concepts and definitions of risk. Authors Cedergren, Hassel and Tehler [7] define risk management as a plan of measures or actions to minimise negative consequences. Jia & Li [8] say that effective risk management is the identification of risks before they occur. According to Rehman, Shakeel Sadiq Jajja and Farooq [9], risks should not be allowed to amplify, but should be identified earlier by consistently monitoring daily results. Sant’Anna, Righi, Müller and Guedes [10] also support this idea. In their article, the authors also refer to a set of defined goals and the outcomes they want to achieve. Risks occur when a negative outcome in the achievement of the set goals is achieved [11].

Risk management can result in both profit and loss. Janczura and Wójcik [12] argue that risk should be assessed as one option of an opportunity, the end result of which can be either profit or loss. Videla-Mensegue, Caviglia and Sadras [13] note that risk is a variable between obtaining the best and the worst outcome.

The risk management process is a systematic approach to identifying, assessing and mitigating risks, which typically involves the following steps:

Risk identification, which is the process of identifying potential hazards and vulnerabilities that may affect the organisation. This step involves the identification of potential threats and hazards that may have a negative impact on the organisation’s goals and objectives.

Risk assessment—the process of analysing and assessing the likelihood and impact of the identified risk. This step covers the likelihood of occurrence of a certain risk, as well as its potential impact if it does occur.

Risk prioritisation—the process of setting risk priorities based on their likelihood and impact in order to focus risk mitigation efforts on the key risk. This includes identification of the risk, which poses the greatest threat on the organisation and should be addressed first.

Risk mitigation—the process of implementing strategies to reduce the likelihood or impact of the risk. This step involves selecting and implementing risk mitigation strategies, such as implementing controls, risk transfer or purchasing insurance.

Monitoring and review: the process of continuously monitoring and reviewing risk management processes and strategies to ensure their effectiveness, and making adjustments where necessary. This step involves the ongoing review of risk management processes and strategies to ensure that they are effective and, where necessary, making adjustments to improve their effectiveness.

Risk management is the process of identifying, assessing and prioritising potential threats to an organisation [14]. A variety of methods can be used to manage the risk, including qualitative and quantitative analysis, scenario planning and risk mitigation strategies, such as insurance, diversification and risk transfer. The choice of the method depends on the nature of the risk, the organisation’s risk tolerance and the available resources. Effective risk management helps organisations to make informed decisions, allocate resources efficiently and respond proactively to unexpected incidents. According to Al-Marzouqi and Arabi [15], quantitative analysis is useful when sufficient data are available to accurately assess the impact of the risk in terms of the quantity and the likelihood of its occurrence. This method provides a numerical value which can be used to identify risk priorities and make decisions on resource allocation. According to Kupiec [16], qualitative analysis is useful when data are scarce or when an expert opinion is needed to assess the impact and likelihood of a risk.

Another approach to risk management is scenario planning. Scenario planning involves developing possible future scenarios and considering how the organisation would respond to each scenario. This helps organisations to anticipate and prepare for future events, as well as to identify potential risk areas. Reiter et al. [17] say that scenario planning encourages organisations to think proactively about risks and make decisions accordingly. In their article, Araya et al. [18] argue that this helps organisations to identify potential areas of risk and develop strategies to mitigate this risk, increasing the resilience of the organisation in preparing for various market challenges or the strong competition to be faced [19]. Not all authors have a positive opinion about scenario development in risk management. Liu et al. [20] state that scenario development may not be suitable for organisations having limited resources or operating in highly uncertain environments. It may be difficult to accurately assess the likelihood of different scenarios in terms of quantity [21]. Nowadays, time is of essence as everything in the world is quickly changing. This is what Gładysz et al. [22] wrote about in his article.

Risk mitigation refers to the process of identifying, analysing and reducing potential risks and vulnerabilities. By implementing risk mitigation strategies, organisations can reduce the likelihood and severity of adverse consequences such as financial loss, reputational damage or operational disruption. These strategies may include risk management processes, contingency planning, insurance and risk transfer mechanisms. By taking proactive measures to address potential risks, organisations can improve their overall resilience and ability to manage unexpected challenges. Majumdar et al. [23] distinguish insurance as one of the risk mitigation strategies. An insurance policy provides financial protection in the event of a loss, reducing the overall impact of risk on an organisation. Insurance is one of the risk mitigation strategies that involves transferring the impact of potential financial loss from the organisation to the insurance company. The organisation pays premiums to the insurance company in exchange for coverage against specific risks such as property damage, liability claims or loss of income. Liu et al. [24] state that insurance provides financial protection in the event of a loss, reducing the overall impact of the risk on the organisation.

Companies can diversify their product offerings, customer base or geographical locations to mitigate the impact of a downturn in any one market [25]. Risk transfer is a risk mitigation strategy that involves shifting responsibility for risk to another party, usually by concluding contracts or through insurance. In a risk transfer scenario, an organisation seeking to mitigate its risk concludes a contract with another party, such as an insurance company or a subcontractor, to assume responsibility for the risk. According to Haile et al. [26], such a transfer of responsibility can help to reduce the overall risk impact on an organisation. For example, an organisation may purchase an insurance policy to transfer the risk of a potential liability claim to an insurance company. In this scenario, the insurance company assumes liability for costs of indemnification of damage, thus reducing the financial impact on the organisation. According to Cao et al. [27], risk can also be transferred by concluding contracts with suppliers, subcontractors or other third parties. By transferring liability for risk, organisations can reduce the risk of potential losses and improve overall resilience.

Risk mitigation methods aim to prevent or reduce the impact of risk on a business. However, even with the best mitigation efforts, risks can still arise. It is therefore essential for companies to have a plan in place to respond to risks if they occur. According to Zhang [28], this plan is known as risk response strategies, which describe the actions to be taken by a company in order to bring the impact of risk under control. Having a well-planned risk response strategy in place, a business can minimise the negative consequences of a risk and protect itself from potential losses. Keshk et al. [29] state that risk response strategies are an important aspect of risk management in any industry, including the car rental industry. There are four strategies that help respond to the risks emerged.

One of such strategies is avoidance, which involves eliminating the risk or avoiding it altogether, either by terminating the activity or refusing the opportunity that creates the risk [30]. This strategy is often used in situations where risks are too high or the potential consequences are too severe to be mitigated by other means. Another strategy is transfer, which involves transferring the risk to another party through insurance, outsourcing or contracts. Haile et al. [26] define risk transfer as a strategy whereby a company transfers the potential financial impact of the risk to another party, usually through insurance, outsourcing or contracts. This can be done by purchasing insurance coverage, such as public liability insurance, which protects the company against potential financial losses from lawsuits or accidents. The transfer of outsourcing services that are perceived as high risk to a third party can also mitigate the likelihood of such risk [31]. Contracts can also be used to transfer risk, for example by requiring the seller or the supplier to assume liability for any damage or losses that may arise from their work.

Mitigation involves reducing the likelihood or impact of a risk by implementing controls or taking other measures [32].

According to Shafqat et al. [33], risk management is a systematic approach to identifying, assessing and mitigating risks that may affect an organisation. The risk management process involves a series of steps that help organisations to identify potential risks, assess their likelihood and impact, prioritise and mitigate these risks, and continuously monitor and review their risk management strategies. Risk management is a process that facilitates the classification and response to risks, while ensuring realistic, actionable and regulatory compliance controls as stated by Zhang et al. [34]. By following a structured risk management process, organisations can proactively address potential threats and hazards, improve overall resilience and reduce the impact of risks on their operations and objectives.

The risk management process is an ongoing effort to help organisations systematically and comprehensively identify, assess and mitigate risks in order to improve the overall resilience and reduce risk impact.

2.2. Applying Risk Management Principles in the Rental Car Market

Risks in the car rental sector may differ from risks in other companies due to the unique nature of the industry. A car is a relatively expensive means of transport. When rented, it is used by many people, thus is subject to continuous wear and tear, or may be badly damaged beyond repair. Damage to company’s property is one of the most significant risks faced by companies [35]. Customers do not always cover damages, as this would be an extensive financial burden on the customer. Therefore, companies often assume some part of losses by introducing franchise cover into their rules or rental agreements.

By offering vehicles for rent, car rental companies take on various risks, such as the possible risk of accidents, theft and vehicle damage. According to Joller [36], to mitigate these risks and ensure business success, it is crucial for car rental companies to implement a comprehensive risk management plan. This may include such measures as regular vehicle maintenance, offering insurance options to customers and monitoring vehicle usage through GPS tracking systems [37]. Car rental companies can provide their customers with a safe, reliable and enjoyable experience while effectively managing the associated risk.

Car rental services play a vital role in providing convenient and flexible transportation options for people who do not have a car or temporarily need a particular type of vehicle [38]. Whether for personal or business purposes, car rental services offer a wide range of vehicles, including compact cars, SUVs, vans and luxury vehicles, so customers can find the perfect vehicle to suit their needs. In addition, car rental services are a cost-effective alternative to owning a car, as customers only pay for the rental period and do not have to worry about the long-term costs associated with vehicle ownership, such as maintenance, insurance and depreciation [39]. The importance of car rental services is even greater in places where public transport is limited or unavailable, allowing people to travel and do business easily. Overall, car rental services play a key role in providing convenient and affordable transport options for individuals and companies.

Car rental services also come with certain risks, such as possible accidents, theft and damage to vehicles. According to the article by Zhang [40], risks in the car rental service are categorized into: risks of the buyer and risks of the seller.

Risks of the service buyer:

• Accidents and damage. One of the main risks faced by customers is accidents and damage to rental vehicles. This can result in costly repairs and insurance claims, which can be a significant financial burden for the customer.
• Theft. Another risk for customers is a theft of a rental vehicle. This can result in the loss of personal property and the need to pay a high franchising fee to the insurance company.
• Large invoice amount. Some customers may be charged more than the agreed rental fee due to a misunderstanding or additional charges for insurance, fuel or default interest.

Risks of the service seller:

• Vehicle damage and maintenance costs. One of the main risks faced by sellers is the possibility that the rented vehicle will be returned damaged. This can lead to pricy repairs and maintenance, which will become a financial burden for the seller.
• A vehicle theft is yet another risk faced by service providers. This can result in the loss of income and the costs of replacement of the stolen vehicle. In such a case, customers usually cover a certain deductible only, which is described in the agreement or conditions of use.
• Customer disputes: disputes may arise between the seller and the customer over charges, interest or other issues. This may result in negative customer feedback, unpleasant experiences and legal action. When it comes to legal aspects, there is a risk of financial losses.
• Data storage. This is an important point to note by the seller: in order to be able to provide its services safely, it must manage personal data in accordance with certain established governmental regulations.

To mitigate this risk, car rental companies often require customers to acquire insurance and may have specific policies governing accidents or damage. Also, car rental companies may implement a comprehensive risk management plan, such as regular vehicle maintenance and monitoring of vehicle usage through GPS tracking systems.

Compared to other businesses, car rental companies face risks unique to the industry. To mitigate these risks, the companies can implement specific policies and procedures, such as regular vehicle maintenance, tracking systems and full-coverage insurance. By taking these steps, car rental companies can reduce risk and ensure a safe and secure experience for their customers.

2.3. Opportunities of Application of Reverse Logistics

Reverse logistics, as part of the supply chain, represents the movement from consumers towards the manufacturer or the processing point. According to Yaspal et al. [41], this process is designed to manage the end-of-life stages of products, including returns, recycling, repair and refurbishment. Wu [42] states that the main functions of reverse logistics include returns management, inventory management, recycling and re-sale, while one of the key functions of reverse logistics is returns management. This involves handling and processing goods that are returned by consumers for various reasons, including defects or unusability. Another important aspect is recycling and remanufacturing, which allows products to have a second life, to be refurbished or recycled into new products or components.

Inventory management is yet another important element of reverse logistics, which allows companies to effectively control their inventory and identify which parts of the product can be reused or recycled [43]. This not only helps to reduce waste, but also contributes to sustainable use of resources. Reverse logistics also requires intermediation and partnership with producers. Collaboration with supply chain partners and manufacturers is becoming necessary to manage product return, refurbishment and recycling more effectively.

Reverse logistics not only allows companies to conserve resources and reduce waste, but also meets growing consumer demands. It enables companies to innovatively reuse products at the end of their life cycle, creating value and contributing to long-term business sustainability.

The applicability of reverse logistics is a critical aspect that rental car companies need to take seriously in order to effectively manage risk factors and optimise operations. It is necessary to look at how this area of logistics is being adapted in the rental car market in the light of changing business conditions, customer needs and environmental requirements. This assessment of applicability will not only provide an insight into how reverse logistics can contribute to the efficient management of car rental, but will also enable the identification of potential areas of improvement in order to achieve greater efficiency and a competitive advantage in this dynamic rental car market.

Gulzari et al. [44] distinguish car return as one of the key processes in reverse logistics. A successful process of return of rental cars closely relates to several key factors to ensure high customer satisfaction and responsiveness. According to Oliveira et al. [45], the renter must be provided with clear information on all repayment procedures, including possible additional charges, deadlines and other important requirements. This is crucial in to avoid potential misunderstandings and conflicts that may arise due to unclear rules or insufficient information. Guity-Zapata et al. [46] say that it is important to maintain regular communication with the renter throughout the return process. This can be achieved through various communication tools such as mobile apps, messaging or regular email updates. Constant communication is essential to ensure that the renter is always informed about the progress of their return, which helps to create a comfortable and convenient customer experience. Finally, professional and helpful service is essential to ensure that the renter feels appreciated as a customer. The return process must be professional, showing courtesy and respect for the customer. This includes an understanding attitude towards the customer’s needs, a prompt response to enquiries and comprehensive assistance throughout the return process. Together, these elements form the basis for a successful returns process that is pleasant to the customer and leaves a positive impression of the company.

2.4. Arranging the Study and Study Methodology

The aim of the study was to investigate the risk management in the car rental business and to assess the impact of the model of renting 5–10-year-old cars with reverse logistics on risk mitigation and business efficiency. Using an expert quantitative research approach and questionnaires, this study aimed to provide a holistic approach to risk management in the car rental sector.

The following objectives were set to achieve this aim:

• To collect quantitative data on customers’ attitudes and preferences towards renting 5–10-year-old cars compared to the newest ones, using a questionnaire survey.
• To carry out a qualitative study in application of an expert survey method obtaining expert opinion on the effectiveness of a 5–10-year-old car rental model with reverse logistics compared to traditional models taking into account operating results and profitability.
• To investigate customer experience and satisfaction with renting 5–10-year-old cars, including reverse logistics, using a qualitative research approach.
• To analyse and assess the potential benefits and challenges associated with a car rental business model using 5–10-year-old cars, reverse logistics and risk management.

Having conducted a literature review, a questionnaire was prepared to collect quantitative data from a range of car rental companies. The questionnaire was designed focusing on key risk management factors such as customer safety, vehicle maintenance and insurance practices. It was distributed to representative car rental companies in order to gain a broader insight into risk management practices in the industry. Statistical analysis of the data collected was carried out to identify trends and patterns. In-depth interviews were conducted with selected professionals in the car rental industry to complement the quantitative data. These interviews provided a more in-depth understanding of risk management practices and allowed exploring specific challenges, strategies and best practices. Semi-structured interviews were conducted with experts from car rental companies, regulators and insurance providers to gather a range of insights.

An expert survey was also carried out to get insights from professionals with extensive knowledge and experience in risk management in the car rental sector. The participation of industry experts helped to validate and complement the findings of the questionnaire and the interviews, adding depth and credibility to the study.

Given that the study aimed to investigate the main risks of renting cars, the focus was on people who have used the service. A quantitative study was chosen to obtain numerical data that could be analysed statistically. Kardelis [47] concludes that quantitative research allows collecting objective data that can be generalised to represent a larger population. Questionnaires are used to collect responses from a representative sample of car rental companies, providing a broader perspective on risk management practices in the sector. Quantitative surveys use a variety of statistical methods to analyse the data collected. This allows for a precise analysis of risk management practices in the car rental sector.

A survey research method was used in the study to gather valuable insights into risk management in the car rental sector. Surveys are an efficient and effective tool for collecting data from a large sample, allowing the study of risk management practices in different car rental companies. Using surveys quantitative data are obtained on various aspects of risk management, such as safety protocols, maintenance procedures and insurance coverage. The survey approach involves the development of a structured questionnaire containing a series of carefully designed questions related to the objectives of the study.

Study population and sample. 131 companies answered the survey questions, while the survey population included 1903 legal entities. The following formula was used to calculate the reliability of the conducted survey:

$$n={\displaystyle \frac{1}{{∆}^2+\frac{1}{N}}},$$

(1)

n = sample size; N = population size; ${∆}^2$ = error.

$$n={\displaystyle \frac{1}{{\left(0.05\right)}^2+\frac{1}{1903}}},$$

$$n={\displaystyle \frac{1}{0.003025}}$$

$$n=330.53$$

By calculating the sample size using the given formula, we determined that approximately 331 companies are required to achieve a margin of error of 5% with a 95% confidence level. This means that, with a sample of 331 companies, the survey results are statistically reliable, representing the population of 1903 companies within an acceptable range of accuracy.

A drafted questionnaire was distributed to a representative sample of car rental companies, asking the respondents to provide answers according to pre-defined response scales or in unlimited formats.

Designing a questionnaire. The online survey design and publication platform Microsoft Forms was used to create the survey and get useful responses. The questionnaire consisted of 13 questions. The first 5 questions were designed to elicit general information about the respondent and the activities conducted by the company he represents. Questions 6 to 10 were designed to find out the respondents’ experience and opinion on reverse logistics in the car rental sector. Questions 11 to 13 aimed to find out how the respondents feel about the development of reverse logistics transport and how they see the potential of this process in the vehicle rental sector.

2.5. Results of the Study on Car Rental with Reverse Logistics Principles

The first multiple-choice question aimed to find out whether the core activity of the respondent’s company was long-term or short-term car rental.

The survey results presented in Figure 1 reveal that the majority of respondents were involved in short-term vehicle rental business, while the remainder engaged in long-term vehicle rental.

The second question aimed to find out the positions held by respondents in their companies. Figure 2 reveals that there were 35 Senior Managers, 31 Managers, 25 Department Head, 20 Assistant Managers, 10 Data Analysts, 7 Directors and 3 Financial Controllers interviewed in the survey. Most of these specialists have worked in their companies 1 to 5 years. The respondents indicated that they work in the European Union market.

In the third question, respondents indicated their length of service at the company, as shown in Figure 3. The majority of respondents have been with the company for 1 to 5 years. A third of the respondents have worked at the company 5 to 10 years, and some have been employed at the company for more than 10 years.

The fourth question asked respondents about the markets in which their companies operate. The responses received (Figure 4) allow concluding that the majority of the companies operate throughout the European Union (40%) and in the Baltic States (38%), with very few companies operating in their home market only (22%).

The fifth survey question was designed to find out what kind of vehicles the respondents’ companies rent. The results of the survey (Figure 5) revealed interesting facts about the vehicle rental business. The survey showed that the majority of the respondents (34%) were involved in car rental. 23% of the respondents indicated that their companies rent passenger cars. Freight vehicle rental was another popular choice, with 33% of respondents operating in this sector. The least common was truck rental, with only 10% of respondent companies operating in this market. These results show the distribution of the different vehicle rental sectors amongst the respondents.

The results obtained from the survey on reverse logistics presented in Figure 6 provide an important insight into the knowledge of the respondents in this area. The survey revealed that as many as 91 respondents (about 69% of the total number of all participants) claim to have been exposed to reverse logistics. However, 40 people (about 31% of all the participants) indicated that they had never heard of this concept.

These results are important as they show that reverse logistics is widely discussed and known among the respondents. This may have a significant impact on the study as most respondents are familiar with the concept and can provide insights or comments on its application or relevance in their operations. Also, a significant number of those who have not yet been exposed to the topic may provide a new and objective perspective which may be useful for further research or analysis.

The obtained survey results presented in Figure 7 give an interesting overview of respondents’ attitudes towards reverse logistics in the car rental sector. Around one third of the respondents (32 people or 24%) think that reverse logistics is present in the car rental sector. Another third (36 people or about 28%) believe that this form of logistics is non-existent in these areas. More than half of the participants (63, or about 48%) answered “somewhat” to the question. This may indicate that respondents have different opinions or are not sufficiently informed about the impact of reverse logistics in the car rental sector. These results reveal a range of attitudes and insights among respondents, the significance of which could be assessed in a wider context.

The received survey results presented in Figure 8 provide data on the factors that affect the rental of older and newer vehicles. The majority of respondents (around 43%) say that lower fuel consumption is one of the decisive factors in the choice of vehicle. Reducing environmental pollution is also considered a significant factor, mentioned by 63 participants (around 30%). Price is yet another important indicator mentioned 56 times (about 27%). The results reveal that the respondents care most about fuel efficiency, but other factors, such as price and contribution to solving environmental problems, are also important. This may have important implications for the car rental sector, including changing habits in choosing the product and the market strategy.

The survey results presented in Figure 9 show that the majority of respondents (100 people or about 76%) believe that the fleet of older vehicles can have an impact on reverse logistics, however, 31 respondents (about 24%) think that it has no impact on reverse logistics. These results show that the majority of the respondents understand the potential of an older vehicle fleet for reverse logistics. This could have important implications for the industrial and logistics sectors in promoting sustainability and efficiency.

Figure 10 illustrates respondents’ attitudes towards the advantages of older vehicle fleets. Around 98 people (75%) believe that an older fleet can be advantageous if the costs of operation of older vehicles are lower. However, 33 respondents (about 25%) believe that this is not true. These results show that the majority of respondents see potential advantages in using older cars when the costs of their operation are lower. This can be important information for the industrial and logistics sectors seeking to manage vehicles more efficiently and reduce operating costs.

The results received (Figure 11) reveal the factors based whereon companies decide to renew their vehicle fleet. The respondents had to rate each factor on a scale from 1 to 5, the averages of which are presented below.

The responses reveal that the companies consider the following factors:

• Price—average score of 3.97 points.
• Maintenance costs—average score of 3.98 points.
• Sustainability—average score of 4.04 points.
• Environmental friendliness—average score of 3.89 points.

This shows that companies find all these factors important, but sustainability is their highest priority, while environmental friendliness is the lowest. These results may be useful for companies when making decisions on vehicle fleet renewal and optimisation.

The results of the survey illustrated in Figure 12 revealed the most important factors for the development of reverse logistics in the vehicle rental sector. The respondents distinguished low operating costs (e.g., repairs, maintenance, etc.) (39 respondents, or 30%), cheap original or non-original body parts (35 respondents, or 27%), competitive price of vehicles on the aftermarket (30 respondents, or 23%), and lower car rental price (27 respondents, or 20%).

These results provide valuable insights into the best aspects to focus on in order to develop reverse logistics in the vehicle rental sector.

The results received (Figure 13) show that the majority of respondents (112 people, or 85%) believe that there is enough room for a reverse logistics-based vehicle rental company in the future, and 19 respondents (around 15%) consider opportunities to be insufficient. These results indicate that the majority of respondents see the potential for a vehicle rental company based on reverse logistics in the future. This could be an important signal to the market regarding the growing interest in this area and the potential business development.

3. Discussion

A survey research method was used to analyse transport companies selected according to certain criteria. Having conducted an in-depth study on risk management in the vehicle rental sector and collected a wide range of data from experts, a number of important trends and factors were observed which have an impact on the dynamics of this sector.

When it comes to reverse logistics, as many as 69% of respondents indicated that they were aware of the concept. The results of the questionnaire survey revealed that respondents working in the field are interested in this topic.

The conducted survey revealed that the most important factor for renting older and newer vehicles was low operating costs (39%), confirming that business entities clearly understand the importance of efficient management of maintenance and repair processes. Companies want to avoid unforeseen costs that could arise from technical problems or unexpected breakdowns. Another important factor specified by 35% of respondents was the availability of cheap original or non-original body parts. This shows that businesses find the balance between quality and cost-effectiveness in this market highly important. They tend to look for solutions that allow them to achieve savings without risking the reliability of operation of vehicles. This is an excellent example of how businesses are actively seeking to rationalise their operations and maximise profits, while also ensuring a high level of customer satisfaction. Thus, these factors are critical to the development and long-term success of an efficient vehicle rental business.

Reverse logistics is an integral part of the sector and its influence is increasingly evident. More than three quarters of respondents (76.3%) strongly agree that an older vehicle fleet can have a positive impact on reverse logistics. This positive attitude shows that participants in the sector are becoming increasingly aware of the potential and benefits of reverse logistics. Reverse logistics is becoming not only a part of operational processes but also a strategic factor that allows for optimisation of resources, reduction of environmental impact and increased profitability. This opens up new opportunities for the sector and encourages further innovation, contributing to overall operational efficiency and sustainability.

The majority of respondents (75%) express the belief that an older vehicle fleet can be advantageous if costs of operation of older vehicles are lower. This strong positive attitude shows that market participants appreciate the opportunity to save on operating costs by choosing older vehicles. It also shows that effective management of maintenance and repair processes is a key factor in keeping older vehicles operational and cost-effective. However, there still is a significant share of respondents (25%) who believe that this is not a superior option. This may indicate that other factors or strategies may have a greater impact on their operating results.

The survey results indicate important factors which respondents consider when renewing their vehicle fleet. The rating on a scale of 1 to 5 reveal that all the factors identified are very important for the activities of companies. Price is the most important aspect, with an average score of 3.97, which reveals that the economic factor has a strong influence on decisions to purchase new vehicles. Costs of operation are also important, scoring 3.98. This shows that companies carefully analyse how factors related to maintenance, repair and operating costs can affect the financial side. Sustainability is another important criterion having scored solid 4.04 points. This reveals that increasing more companies are considering the long-term sustainability aspect and are looking to invest in vehicles that have a lower environmental impact. Environmental friendliness, with a score of 3.89, is another significant factor, which indicates that companies are concerned about reducing their environmental impact and choosing vehicles that meet high environmental standards.

The survey results show that companies are more than ever considering various aspects to ensure that economic, environmental and sustainability requirements are met when upgrading their vehicle fleet. Thus, businesses are actively contributing to sustainable and responsible practices in the transport sector. Therefore, reverse logistics should also be considered.

The analysis of the respondent responses on the most important aspects for the development of reverse logistics in the vehicle rental sector provides an insight into the stakeholders’ assessments in this area. The majority of respondents (39%) emphasised the importance of low operating costs such as repair and maintenance costs. This shows that businesses value most the possibility to optimise maintenance processes thus reducing the share of their operating costs. Another important topic was the availability of cheap original or non-original body parts, which was specified by 35% of respondents. This aspect highlights the need to find cost-effective but quality solutions for the replacement or repair of car parts. Competitive vehicle prices on the secondary market were also identified by 30% of the participants as the key factor for the development of reverse logistics in this sector. This shows that market competition is a strong lever for improving the performance of the sector. Finally, 27% of the respondents indicated the lower cost of car rental as the most important aspect. Such a result confirms that customers are also actively interested in the possibility of obtaining favourable conditions to facilitate vehicle rental.

All these results indicate that businesses are highly focused on creating strategies to develop reverse logistics in this sector, which allows them to exploit opportunities for more efficient maintenance, resource savings and competitive prices, all of which contribute to sustainable and viable operations.

The opinion of the respondents clearly indicates that the majority of them believe in the possibility of having a vehicle rental company based on reverse logistics, suggesting a high level of confidence in the concept of reverse logistics and its potential in this sector.

The majority of respondents believe that now is a good time to develop a vehicle rental business based on reverse logistics principles. This shows that this innovative perspective is much appreciated and could contribute to the development and innovation of the sector.

The results of the study provide detailed information on the vehicle rental sector and its relationship with reverse logistics. The survey shows that businesses are considering a range of factors, including operating costs, sustainability, environmental friendliness and prices. In addition, respondents strongly agreed that an older vehicle fleet can have a positive impact on reverse logistics, and there was strong support for the potential to develop the sector with reverse logistics. These findings suggest that this innovative perspective is viewed positively and could contribute to the development and innovation of the sector. All these results have the potential to influence the future of the vehicle rental sector and encourage its further transformation into a more modern, efficient and environmentally friendly activity.

The integration of reverse logistics into the car rental sector in the model highlights key factors, such as technological advances and infrastructure, which provide opportunities for the model to grow and progress. These factors are closely linked to reverse logistics. Technological progress and infrastructure improvements would have a positive impact on the country’s economic indicators and society. Efficient use of resources based on the latest technologies enables companies and public organisations to reduce costs, improve the quality of products and services and optimise business processes, which in turn boosts profitability and contributes to economic growth. New technological solutions and infrastructure projects not only create new jobs, but also foster innovation and competitiveness. Companies that embrace the latest technologies can differentiate themselves in the market, raise investment and increase their country’s export potential. Improving transport infrastructure through efficient transport and logistics reduces the cost of moving goods, facilitates trade and contributes to overall economic efficiency. It also helps to create conditions for a clean and sustainable mobility system, contributing to environmental objectives. The deployment of technology in the energy sector can improve clean and sustainable energy alternatives, reduce the use of fossil fuels and environmental pollution. Infrastructure projects, including energy-efficient buildings, can also improve sustainability. Infrastructure improvements go hand in hand with the quality of public services. Improving roads, airports and communication networks improves the comfort of the population, boosts tourism and contributes to the overall well-being of society. Technological progress and infrastructure improvements provide an integral platform for economic growth and the long-term development of a country, contributing to resource efficiency, job creation, fostering innovation and the public good.

Significant upfront savings. The lower purchase price of older vehicles means that buyers save a lot of money upfront. The purchase price of a newer vehicle is often much higher, even though running costs (e.g., fuel efficiency, frequency of maintenance) may be lower. These initial savings can offset future running costs over the long term.

Depreciation. New cars depreciate faster than older ones. When a new car leaves the lot, it loses a large part of its value. The depreciation of an older car has already taken place, so the resale value usually stabilises. This may mean that a higher value is maintained despite regular maintenance.

While older cars may need more frequent repairs, buyers can often defer or spread these costs over time. Overall running costs can accumulate slowly compared to the immediate and high costs of buying a new car.

Targeted repairs and overhauls. In many cases, repairs on older cars can be more predictable and less extensive compared to unexpected major repairs that may occur after the new car warranty has expired. If buyers are prepared for routine repairs, it may turn out that the total long-term cost will still be less than the premium paid for the new car.

Lower financing or no loan. Older cars are often purchased with lower financing costs or no loan because of their lower purchase price. Less interest is paid overtime, so even if running costs are higher, the total transaction costs, including finance, may still be lower. New cars are often sold with loans, which add significant costs over the whole period.

The integration of reverse logistics into the car rental sector requires multifaceted support, ranging from public funding to the development of new legislation to reduce environmental pollution caused by transport. This includes cooperation between different countries and the development of new strategies and projects for the interaction between different modes of transport. Access to all modes of transport would be a key factor in the introduction of reverse logistics into the car rental sector. Various political, social and economic measures, such as tax incentives and subsidies, can be used to encourage businesses to opt for rented transport. This integrated concept of reverse logistics would create opportunities to develop the introduction of reverse logistics into the rental car market, which would not only reduce negative environmental impacts but also contribute effectively to the development of a green, sustainable and cost-effective transport infrastructure.

To achieve customer satisfaction, high quality of services must be ensured. This means that cars need to be constantly maintained and taken to workshops for maintenance, and such car maintenance process is expensive. It requires not only paying for the works performed, but also results in loss of revenue, as while being repaired, the car does not generate any income. Illgen and Höck [48] conclude that car downtime in a workshop is most costly for companies as the cars cannot be offered to customers at that time.

A roadworthy car is the one that has a valid roadworthiness test certificate, is registered, has a registration number and is covered under third-party motor liability insurance. Car insurance is a critical aspect of the car rental industry as it protects both the rental company and the customer from potential losses and liabilities that may arise during the rental period. For car rental companies, insurance helps to mitigate the risks associated with owning and operating a vehicle fleet. This can include accident liability insurance, property damage insurance for theft or damage to vehicles and collision damage insurance to protect the company from financial loss in the event of an accident. For customers, car insurance provides protection against potential liabilities and losses that may arise during the rental period. This can be accident liability insurance, personal accident insurance to cover medical expenses and insurance of personal belongings to protect personal property in the rental vehicle. Car rental companies usually offer insurance as an optional add-on to the rental agreement, but in some cases the rental company may require customers to buy insurance as a condition of the rental.

Companies must comply with local regulations concerning waste disposal, recycling, and the handling of hazardous materials. The lack of clear technological solutions to manage these regulations efficiently can slow down reverse logistics and increase compliance costs.

Leasing 5- to 10-year-old cars as part of a sustainable environment plan can reduce exhaust pollution in several ways, though the impact would depend on the specifics of the plan and the types of vehicles involved. Here’s how this approach can contribute:

• Emphasis on Maintenance: Older vehicles, if properly maintained, can still operate efficiently. Regular servicing to improve fuel economy, replace faulty parts, and ensure the engine runs cleanly can significantly reduce the emissions older cars produce. A sustainable leasing plan might include ensuring these cars are well-maintained to minimize their environmental impact.
• Reduction of New Car Production: Manufacturing new cars has a significant environmental impact, including carbon emissions from mining materials, assembly, and transportation. By leasing and prolonging the life of existing vehicles, the need for new car production is reduced, indirectly lowering the overall carbon footprint associated with car production.

4. Conclusions

Researchers point to the risk mitigation approach as one of the risk management models. This approach consists of the following components: insurance, diversification and risk transfer. The conducted literature analysis allows concluding that by applying effective risk mitigation strategies, organisations can reduce the impact of adverse incidents, improve decision-making processes and strengthen their overall resilience to unforeseen challenges. As businesses expand and seek new services in car rental, the number of risks that can lead to loss also increases. Researchers emphasize that risk management processes are needed for patterns to emerge. Loss is one of the risks in the car rental sector. To manage this risk, researchers propose to integrate reverse logistics processes into the car rental sector by reducing costs. In this case, companies would be able to achieve good financial results.

In assessing the opportunities of the car rental sector and the specificities of implementing reverse logistics, the researchers point out that the potential is not being exploited. The lack of technological progress and infrastructure are identified as the main problematic factors for the introduction of reverse logistics.

Compared to other companies, car rental companies face unique risks specific to the industry. In order to mitigate these risks, car rental companies can implement specific policies and procedures, such as regular vehicle maintenance, tracking systems and full-coverage insurance. By taking these steps, car rental companies can mitigate risks and ensure safety and reliability of service for their customers.

The conducted online questionnaire survey of Lithuanian car rental companies and their representatives revealed that the majority of respondents are engaged in short-term car rental activities. The survey also found that reverse logistics is perceived positively in the car rental sector.

The applied expert evaluation method helped to identify the main issues related to the car rental sector. The expert survey confirmed the results obtained from the analysis of the literature sources, which showed that the main problems related to the introduction of reverse logistics in the car rental sector are the lack of technology and infrastructure.

By understanding the impact of new technologies and market trends on risk management in the car rental market, car rental companies can make informed decisions and develop effective risk management strategies to ensure the long-term success and sustainability of their business.

Introducing reverse logistics into the car rental sector will increase company profits and reduce pollution.

Having integrated reverse logistics, infrastructure development would take on a new dimension, contributing to better connectivity and more efficient management of returned cars. The use of advanced technologies in this area would help to optimise information flows, coordinate large numbers of repaired vehicles and promote innovative freight transport solutions. This integration could result in an efficient and responsive multimodal transport network, contributing to environmental sustainability and the creation of new jobs in this sector.

Reverse logistics could increase the efficiency of the risk management process. It should be emphasized that modern technology can provide new solutions and optimize logistics activities, while increasing the efficiency of the entire process. However, in practice, there may be certain challenges related to technology integration or implementation, which may hinder effective risk management.

Implementing advanced reverse logistics technologies and building the necessary infrastructure often requires significant investment. For many companies, especially smaller businesses, the cost is prohibitive, limiting their ability to improve efficiency in reverse logistics processes.