On Thursday, Hertz announced a broad expansion of its rental car services, with plans to roll out vehicles and technology making it possible to rent at any hour of the day, for any time period desired, in nearly five times as many neighborhood locations as the company currently operates. The “game changer,” as Hertz inevitably calls the plan, would mean an elimination of the usual need to pick up a rental car during normal business hours from a standard location like the airport. Within a few years, Hertz wants to have its cars in as many as 12,000 U.S. locations—including parking lots outside retailers like Walgreens and Lowe’s—that can be rented via computer or mobile device with a quick and easy reservation system. “The company estimates that by 2016, it will have ‘self-serve’ vehicles within minutes of the majority of the United States population,” a press release states.
A Bloomberg News story characterized Hertz’ move essentially as an attack on Enterprise, whose 5,500 U.S. locations are mainly in residential neighborhoods, as opposed to airports and other spots catering to travelers. A recent Polk study, summed up in Auto Rental News describes a significant portion of Enterprise customers as locals who “rent from neighborhood locations because their cars are in for body work or mechanical repairs.”
As you might guess, Enterprise renters are far more likely than customers of other rental agencies to buy a new car after renting—55% more likely, to be precise. “This research confirms that, for many consumers, renting a car is truly an extended test drive,” said Mark Pauze, senior product marketing manager for Polk. And for now at least, Enterprise dominates this extended test drive scene.
By dramatically spreading out into neighborhoods and offering convenient 24/7 rentals, Hertz is obviously demonstrating it wants in on this local market. The expansion isn’t meant just to step up the competition with Enterprise, however, but also with Hertz’s traditional rival, Avis—or rather, the car-sharing company Avis-Budget purchased in January, Zipcar.
Zipcar is the world’s largest car-sharing service, offering rentals for as short as one hour in more than 20 cities and dozens of college towns. The service also recently began opening up airport locations, long considered the domain of Hertz, Budget, Thrifty, and other traditional rental outfits.
With Hertz’s new plan, its cars will be spread out in many of the same neighborhoods as Zipcar, and Hertz’s vehicles will be available for rent 24/7, on an hourly, daily, weekly, or monthly self-serve basis, just like Zipcar. The Hertz press release points out that its services have “no membership fees,” which sure seems like a swipe at Zipcar, which generally charges $60 per year, plus a $25 application fee. Hertz also highlights the fact that it offers one-way rentals (pick up in one spot, drop off in another), which Zipcar doesn’t allow.
For that matter, Hertz’s expansion could also be seen as an attempt to encroach on the business of peer-to-peer rental services like RelayRides. RelayRides was originally envisioned as way people could affordably rent cars for brief periods from their neighbors—when in need of a car to run errands, for instance. Hertz’s hourly rental service competes directly with that, though, presumably, RelayRides rates will be cheaper.
While RelayRides has encountered some legal complications like many other “sharing economy” businesses, it has also enjoyed great success, partly because owners and renters have expanded far beyond the company’s original vision—with long-term rentals and airport rentals, in addition to the more typical neighborhood car hires. With Hertz’s reinvention, it’ll theoretically be able to compete on all of these fronts as well.
Source: TIME, by Brad Tuttle, July 1, 2013
