Trouble in the car business is not limited to General Motors, Ford and Chrysler. Car rental companies are also feeling the pinch of a dismal economy.
Roosevelt Holloman, vice president of Travel Leaders, said customers are not traveling as much as they used to, which has made a huge impact on the industry.
According to Holloman, car rental companies are closely associated with the travel industry, particularly airline passengers. Most customers usually rent cars at airports all around the country, but with fewer people traveling, car rental companies have less business.
“At our Avis rental car company, we have to pay an airport concession fee in exchange to operate at airports,” said Barrett Thomas, manager at Avis car rental. “Now that people are traveling less, we have to focus more now on ancillary sales to our customers such as GPS units, car seats, XM satellite radio, and fuel protection.”
Thomas said the company is also focusing on hybrid models.
“We found out that customers are trying to save as much as they can, so we invested more in fuel-efficient vehicles such as hybrids instead of SUVs’ and trucks,” Thomas said. “With the economy as bad as it is, rental companies are not leasing as many cars as they used too.”
When GM, Ford and Chrysler were facing financial problems, car rental companies were affected soon afterward.
“The Big Three automotive bailout had impacted gradually on our car rental agency,” said Mike Blasini, manager of Budget car rentals. “We finance our cars, but when the Big Three incident occurred lenders were not lending credit, which forced us to decrease the amount of cars we leased.”
Blasini said Budget car rentals’ sales have decreased about 40 percent since the economy soured, so the company is trying to improve its customer service to hold on to loyal customers.
Hertz, the world’s largest car rental company, was also affected by the Big Three automotive bailout. Without being able to borrow enough money to finance all its purchases, Hertz will be forced to buy fewer vehicles. According to a Hertz press statement, the company said it would cut 4,000 employees to save up to $170 million in 2009.
With all their problems, some car rental companies have increased in their rental rates to boost revenues. Avis and Budget announced that rate would be increased by an average of $3 per day to $20 a week.
Hertz also announced that there would be an increase in their rates by an average of over $5 per day in the U.S airport market.
Students are already feeling the effects of the higher fees.
“I tried to rent a car to go to Miami for spring break, but most rental companies wanted more for a deposit and the rates were higher,” said Ralph Lipsey, 21, a senior pre-law student from Miami.