Dear Rental Car Businesses:
You’ve been around for a long time. The first ad for a rental car appeared in a Minneapolis newspaper on July 22, 1904. It was placed by a bicycle shop that hoped to make some income by renting the family Stanley Steamer. Being a bicycle shop, motorcars were an after-thought. The concept didn’t catch on until 1912.
Well, not exactly “catch on.” The Germany company, Sixt, established their own fleet of rental cars. There were three of them. The enterprising Saunders brothers of Omaha started their own rental company in 1916. Son Joe borrowed a Ford Model T from a friend and started renting it out for six cents a mile. This was a somewhat strange business model, as cars back then didn’t have odometers. You could say that you were just going 3 miles across the river to Council Bluffs, when you really planned on driving the 25 miles to visit your girlfriend in Lincoln. Nevertheless, the Saunders made enough money to have a fleet of 10 new Model T cars in use the next year. A few hundred miles to the northeast, a Chicago businessman named Walter Jacobs had started his own company with twelve Model T units. Ford saw letting companies use their cars for rentals was a great way to get people to sample their product.
After almost forty years, the Saunders family sold their business to an upstart company called Avis. Jacobs didn’t wait that long. In 1923 he sold his company to a fellow named John Hertz. After WWII, the car rental business exploded. Today, there are hundreds and hundreds of car rental companies out there. This competition should make the market very competitive. Well…not really. I bet you didn’t think we knew this, but only four huge conglomerates own the top nine car rental companies:
Enterprise Holdings Alamo
Hertz Global Holdings Hertz
Avis Budget Group Avis
Dollar Thrifty Automotive Group Dollar
You guys buy more than 2 million cars and trucks every year, making you the largest automotive customer in the United States. You’re 20% of the market! No wonder carmakers have “special prices” for you when you buy cars 10,000 at a time.
Of course I appreciate the speed rental agreements are now done. I certainly don’t miss those printers spewing out pages of agreement on paper with perforated edges. That speed is negated, however, by the 20-minute bus ride we now have to take to get to our car.
You four guys own most of the pie. It would be great if you could make your prices more competitive, and not just use your different brands to lock up different price points. While I’m at it, your pricing is more confusing than trying to buy an airline ticket. I’ve called one of your offices to inquire about extending my rental, asking what an extra day would cost. I would be given a price. I called back a few minutes later, spoke to another service person, and was given a price $80 less than the previous one.
Just know that we know about you, and that we know that we’re not dealing with Joe Sanders and Walter Jacobs anymore.
Yours in insurance upsells,
John Q. Public