THURSDAY, SEPTEMBER 5, 2019 --
Sometimes a slap in the wallet morphs into a seismic wake-up call. That's what happened when the Avis Web site quoted $176 a day for a Toyota Corolla at the airport in Syracuse, New York. Add in taxes, fees and surcharges and that was nearly $800 for four days.
Two hundred bucks a day? For a Corolla?
It wasn't that many years ago when I was paying $15.95 a day for a Corolla from an off-airport rental firm at LAX. Appalled by the Avis quote, I settled for a $60-a-day Ford Fiesta from Hertz. Of course, Hertz brings its own issues. The subcompact was roomy enough, but the Hertz vehicle desperately needed a tune-up.
A closer look at rental car prices nationwide found that my Syracuse quote from Avis wasn't that shocking.
In mid-August for a four-day rental, Avis quoted $101 a day for a four-day rental of the same Toyota Corolla at Dallas/Fort Worth. It was about $92 a day for a Ford Focus. At Chicago/O'Hare, Enterprise asked $60 a day for a midsize car that could be the Volkswagen Jetta, Chrysler 200 or a Buick Verona. But the quote ballooned 50 percent when the taxes, fees, surcharges and assessments were added. National, owned by Enterprise, was quoting $150 a day at O'Hare. At Sea-Tac, Avis' Budget subsidiary quoted $79.30 a day for a midsize and the choices were Hyundai Elantra or the ubiquitous Toyota Corolla. However, Budget deems the VW Jetta and Chrysler 200 as standard-size cars and the rate was $85.28 a day.
What has happened to car-rental prices and why have they ballooned so quickly compared to other segments of business travel? Several decades ago, the major rental brands were mostly owned by Detroit automakers. The carmakers wanted a guaranteed fleet customer to soak up inventory when times were soft at retail. Their car-rental subsidiaries were given favorable pricing and terms and business travelers were awash in cheap rentals of shiny, new automobiles.
When automakers shed their car rental companies, the sweetheart pricing disappeared and the rental industry consolidated
. Like the U.S. airline business, three corporate entities now dominate. The Hertz Corporation, now privately owned, controls the Dollar, Thrifty and Firefly brands as well as Hertz, the one-time rental kingpin. The Avis Budget Group has Avis, Budget, Payless and ZipCar. The Enterprise Group
has become the industry giant, controlling National, Alamo, the former WeCar sharing service and Enterprise, which built its brand off the airport but now competes on the airport, too.
The rental-car firms have also been devastated by the rise of Uber, Lyft and other ride-share firms. In fact, Uber and Lyft are now the most expensed brands
by business travelers, even surpassing airlines. Especially if you need transportation for meetings and conferences, why rent a car when it winds up sitting in an expensive parking lot most of the day? And anyone who wants to get in and out of an airport quickly may prefer a ride hail rather than hopping on a rental bus, dealing with paperwork, getting an unfamiliar rental car and maneuvering around confusing airport roads.
"Uber meets the same need with less planning and generally lower prices," says Mike Burrows, a business traveler who has no hesitation suggesting that "car rental is an industry that should die a horrid death."
Yet the car rental industry's longtime top consultant, Neil Abrams, insists that the car rental companies are healthy despite the sweeping changes to the transportation landscape.
"There is no reason in this universe that a Toyota Corolla should cost $171 a day unless it was the last Corolla on the planet or there was a major conference or a college homecoming week in Syracuse," he says.
Abrams says car rental revenues and rental transactions are growing albeit slowly, "not in leaps and bounds but in single digits." He also insists that Uber and Lyft "aren't hurting us. The average Uber customer is a 15-minute ride and the average car rental is three days."
Still, it's not just the Big Three rental firms that are under pressure. Smaller, independent car-rental outfits are disappearing, says Abrams. "There used to be thousands, but now there are hundreds."
A prime example: One of the largest U.S. independents, Fox Rent a Car has agreed to be purchased by Europcar
, the French company. That leaves Advantage Rent a Car, once a Hertz subsidiary, as one of the few independent firms with an airport network. Even Silvercar
, the app-based, all-Audi rental firm now a subsidiary of the carmaker, is represented at just 20 airports.
Ironically, when you can find them, local independent car rental firms often have the best prices. For example, I just booked a Toyota Corolla from Midway Car Rental
in Los Angeles for $24 a day for a four-day rental. Midway's lot is just outside LAX and it reimburses me for a rideshare or taxi to its off-airport office. Midway also rents Volvos, Mercedes and other premium cars for about what I paid for that tiny Ford Fiesta in Syracuse.
If there are, indeed, "hundreds" of local independents, every city might have a Midway. You just have to search for them and roll the dice on a new player.