Car rental companies raise rates, cut workers to keep up

To many frequent renters, it's obvious that the economic slump has hit the car rental industry.

Business travelers say they're receiving cars with more miles on their odometers and less maintenance. They also say rates are rising, and there's less staff to handle check-in and checkout.

With fewer renters, rental car companies are eliminating jobs and closing some off-airport rental locations.

"These are troubling times in the industry," says Chris Brown, managing editor of trade publication Auto Rental News.

Among recent developments:

•Avis Budget Group this month eliminated 2,200 jobs — about 7% of its employees — to help reduce costs $150 million to $200 million annually. Hertz says it laid off 2,000 workers this year, and Dollar Thrifty, Enterprise, National and Alamo also reduced their workforces in recent months.

•Hertz reported that net income dropped 94% to $63 million during the first nine months this year. There also was a 2% drop in the number of days its cars were rented.

•Advantage Rent A Car, which bills itself as "one of America's fastest-growing car rental companies," announced on Dec. 8 that it filed for bankruptcy reorganization in federal bankruptcy court. The company also said that rentals are no longer available at most of its 48 U.S. locations.

•A Standard & Poor's research report released in late November said Dollar Thrifty "appears to be the most likely" of the big rental companies to file for protection from creditors in bankruptcy court. A Dollar Thrifty bankruptcy filing "might even result in a liquidation," the report said.

Dollar Thrifty declined to comment.

Rental car consultants and analysts tell USA TODAY that they don't expect any of the big brands to disappear. "It's not likely to happen," says John Healy of FTN Midwest Securities.

Car rental companies, however, "realize the frailty of the industry's health," Healy said in an industry report this month, and should continue to reduce their workforces and fleets.

The companies should also continue to "shutter underperforming locations, purchase fewer vehicles, hold vehicles longer to reduce expense and push through price increases," he said.

Auto rental companies are keeping vehicles in their fleets longer, because the used car market is weak and their resale values are low, Healy says.

Richard Leck, a management consultant in Bedford, N.H., says he's rented more than 50 times this year and several times received cars with 29,000 to 35,000 miles on their odometers.

Another frequent renter, Robert Milk, says he seldom gets a car with fewer than 20,000 miles on the odometer.

"I remember the days when over 6,000 was unusual," says the management consultant from Glen Allen, Va.

Hertz, Avis Budget and Dollar Thrifty did not answer USA TODAY questions about the economic downturn's effect on the age of their fleets.

Enterprise Vice President Pat Farrell says the average age of the company's vehicles is seven months, and they average 14,000 miles. The averages include the vehicles of National, Alamo and their parent company, Enterprise.

Until recently, the company sold its vehicles after 11 months in service and about 22,000 miles, he says.

But the economic downturn and the "difficult used car market" have caused Enterprise to hold onto cars until they have been driven an average of 26,000 miles.

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