Still in the Driver's Seat

Competition in the rent-a-car business has turned into a wide-open melee aimed at knocking Hertz out of the driver's seat. Avis ads try to make a virtue out of running a poor second ("We try harder"). Third-place National Car Rental advertises somewhat ruefully that no one has to wait in line for one of its cars. And across the U.S., dozens of rental firms are offering cut-rate charges, hoping to sting giant Hertz, which does nearly a third of all car renting.

Hertz has counterattacked its two big competitors by offering $50 in credit to anyone who has a complaint about a Hertz car he rents; in a gibe at Avis' line about how its ashtrays are always clean, Hertz quips that there are "no ifs, ands or butts" about the offer. Last week Hertz moved against its budget competition as well by announcing the formation of a new company, called Valcar Rentals Corp., that will rent full-sized cars at discount rates.

Disgruntled Urbanites. The strange thing about all the competition is that nobody seems to be getting hurt--least of all Hertz. Year after year Hertz revenues reach new records ($198 million last year from renting and leasing 62,800 cars and trucks). Avis helped boost its revenues 11% last year with its ad campaign, turned a 1962 loss of $3,000,000 into a $1,200,000 profit. National is also making steady gains. The budget renters are growing fastest of all. The largest of them, Chicago-based Budget Rent-A-Car System, has gone from $600,000 in revenues four years ago to an anticipated $18 million this year.

One reason for the rental boom is that each year more tourists and businessmen discover the convenience of flying to their destination, then renting a car to drive around in while they are there. Moreover, city dwellers in greater numbers are becoming disgruntled at high garage bills and insurance costs, and are turning to rental cars for their drive to the country. Since 1962 the number of rental cars has risen from 80,000 to 105,000--each of which may be rented several times a week--and the industry's revenues have gone from $250 million to an estimated $370 million this year.

Never Served Before. In announcing Valcar's birth, Hertz President Giles A. Wanamaker insisted that Hertz is not moving into economy rentals because it is losing sales to the budget renters but because budget rentals have smoked out customers that the car renters have never served before--and Hertz wants its share of them. Valcar will offer all the regular features in its rented cars (radio, seat belts, etc.) but will eliminate such extras as revolving credit, airport locations, car delivery and wide choice of models. It will rent a Chevrolet Impala for $6 a day plus 60 a mile with no gasoline included v. $10 a day plus 100 per mile and free gasoline for a regular Hertz car.

With the power of Hertz behind it, Valcar should soon be a major contender in budget renting. But there will still be plenty of business for everyone. In the U.S., 94 million people drive cars, and so far only about 4% of them have tried renting.

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