Uncovering the Secret of Nippon Rent-A-Car’s Great Leap Forward
—Defense and Offense Strategies that Turned Crisis into Opportunity

Yuji Itagaki, Director and Senior Managing Executive Officer, Nippon Rent-A-Car Service Inc.

The Dramatic Economic Impact of the COVID-19 Required Turning Crisis into Opportunity

――I believe that the car rental industry experienced considerable decline due to the COVID-19 pandemic. What kind of reform did Nippon Rent-A-Car implement?

Itagaki: The first state of emergency was declared in April 2020, less than a month after I became a director of Nippon Rent-A-Car. I still remember those days well. In the following month, May, sales plummeted to 35% from the previous year. Reservations were repeatedly cancelled, with customers seeing to disappear leaving vehicles just sitting unused on the lot, and the situation persisted for a long time. To be honest, it seemed to me that anxiety about the future dominated the entire organization.

As we faced an unprecedented crisis with no clear future in sight, we focused our discussions with management on what we could do now. It certainly seemed that there was no better opportunity to turn crisis into opportunity. In the course of reviewing standard procedures, we formulated a reform policy based on the two axes of defense and offense toward establishing a new Nippon Rent-A-Car.

For us, Defense meant reduction, and we took action to directly reduce costs. For example, we verified the effectiveness of every channel from web advertisements to customer mailings, and if cost-effectiveness could not be expected, we reduced or discontinued the effort. We were strongly determined to apply a scalpel to every aspect of our operations, while understanding that raising the anxiety of branch staff would be counter-productive, so we decided to continue airing TV commercials. To effectively promote offense-oriented structural reforms, we carefully identified the necessary from the unnecessary to avoid excessive restructuring.

Offense means strengthening earning power. To increase the visibility of our website as the point of contact with customers, we redesigned the site and significantly simplified the steps for making reservations. We also developed and released an app to search for available cars, compare prices, and select options. Customers can use the app to confirm in advance terms that they previously had to handle at our branch, and they can also easily make reservations based on their rental history.

Itagaki: I can say now that this structural reform would not have been possible if there had not been a COVID-19 pandemic. We were able to carry out it driven by a sense of crisis about losing customers.

　

Three Priority Measures Formulated through Reforms in Defense and Offense

――Could you give us an overview of the new medium-term management plan that started in fiscal 2023?

Itagaki: In the new medium-term management plan, our vision is to “achieve sustainable growth through a virtuous cycle of performance improvement by employee happiness and customer happiness.”

In the course of implementing defense and offense, I have on many occasions felt that customer service is the most important aspect of Nippon Rent-a-Car’s business. All our frontline employees are very earnest and always think about how they can make customers happy. Since coming to this recognition, I have started to believe that if you can’t establish an environment in which employees can be happy, you won’t be able to provide good customer service. Recognizing that employees who are happy with their work (employee happiness) will definitely provide service that makes customers happy (customer happiness) as well, I came up with the concept that cultivating fans will drive business performance.

　

Itagaki: We have launched these three measures to realize employee happiness and customer happiness: 1. Office boost strategy, 2. Invest in human resources (strengthen employee engagement), and 3. Enhance customer service and improve operational efficiency through DX. Under Nippon Rent-A-Car’s Group slogan, “One NR (One Team + Provision of the Number One Service),” we are taking action with a sense of unity.

With regard to the office boost strategy, plans are underway to renovate or relocate 203 or nearly 40% of the approximately 550 Nippon Rent-A-Car branches nationwide by 2025. About 100 have already been renovated. Our goal is to establish more satisfying settings by eliminating the negative aspects of small spaces, such as customers having to line up outside or having to go to a parking space some distance away to pick up their cars before departure.

For instance, the Yokohama Station West Exit Branch was renovated to significantly expand the office and parking lot. Sufficient space has been secured in the customer reception area and in the back-office, and the parking lot includes a two-level structure, a covered car wash, and EV chargers.

Yokohama Station West Exit Branch and parking space, relocated and renovated in 2023　

Left: 2-level parking facility; Right: Covered car wash

――What about investment in human resources and DX?

Itagaki: Regarding investment in human resources, we are stepping up our training system. As Nippon Rent-A-Car had long been operating under a franchise system, the customer service and service content of each office was left entirely to its operating company. In 2018, we changed from the franchise system to a nationwide direct management system, although there were some differences in enthusiasm depending on the region. To bridge this gap, we introduced a new unified training system by career and rank, including practical training, smile training, makeup training, and even training for mid-level employees and executives, as an initiative rooted in “One NR.” The training system is designed to motivate employees to participate by inviting instructors from a cosmetics company for makeup training and from an airline company for smile training.

Makeup Training

Itagaki: In terms of DX, we have started with the basics of improving the functionality of our website, changing our web reservation system, and developing an app, and have also launched a new contactless self-car rental service that saves time. These measures are intended to improve usability, that is, eliminating the hassle customers experience by avoiding complicated procedures at our branches to allow them to quickly depart, while also reducing as much as possible the burden on branch staffers.

　

Itagaki: Considering the increased use of car sharing, I believe that our in-person transaction continues to be one of our company’s strengths.

　

Achieving Employee Happiness and Customer Happiness as the Ideal Goal

――In closing, would you share with us your company’s thoughts behind highlighting employee happiness and customer happiness in the new medium-term management plan?

　

Itagaki: Thanks to our front-line staff who implemented a number of practices in the wake of the pandemic, we were able to dramatically break our all-time profit record for two consecutive years starting in 2022.

Employee happiness is achieved by establishing an environment in which approximately 6,000 employees and part-timers at Nippon Rent-A-Car can truly feel joy in working. It is important to continue to be a company whose employees feel and show employee happiness and pride to their families and close friends.

Customer happiness cannot be achieved without employee happiness, so I would like to further pursue a level of customer happiness beyond convenience and satisfaction, with deep appreciation the efforts of our front-line staff. I believe that we can enhance Eemployee and customer happiness by listening sincerely to complaints and requests as well as compliments, and constantly seeking improvements.

While improving efficiency through DX is essential, Nippon Rent-A-Car’s business development always puts branch operations first. While conversing with customers face-to-face, we want them to become our fans and say, “I want to use Nippon Rent-A-Car again.” To consistently provide comfortable services, we will continue to grow while maintaining the “One NR” mindset.

　

Note: The contents of the article and the position titles are current as of the date posted.

3+