Recession had minor impact on car rental business

Corridor car rental managers seeing rebound

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March 28, 2014 | 9:45 pm

The recession seems to have been nothing more than a speed bump for the car rental industry.

“Our rental volume has increased over the last 12 months, which is a good sign the economy is improving,” said Dan Callahan, owner of Budget Car Sales and Rental of Cedar Rapids. “My numbers now are higher than pre-recession.”

The car rental industry saw record revenue of $23.63 billion in 2012, up from $20.05 billion in 2009, according to industry publication Auto Rental News. In 2012, there were about 1.9 million rental cars on the road, well above 2010’s 1.6 million.

The industry is tied closely to airline travel and hotel bookings, and government and defense industry spending cuts are expected to affect both segments.

Weaker-than-anticipated rentals at airports led Hertz, the nation’s No. 2 car rental company, to cut its 2013 earnings guidance on Sept. 26. Still, the company said it expects record earnings for the year due in part to the strength of its off-airport rentals and the recently-acquired Dollar Thrifty business.

Hertz’s acquisition of rival Dollar Thrifty in November 2012 reflects one major industry trend: consolidation. Industry mergers have left about 95 percent of the market in the hands of three companies: Enterprise Holdings (Enterprise, National and Alamo), Hertz Global Holdings (Hertz, Thrifty Car Rental and Dollar Rent A Car) and Avis Budget Group (Avis and Budget).

Callahan said he teamed up with the owner of the local Avis franchise earlier this year to add the Budget brand to the existing options at The Eastern Iowa Airport.

While the national brands may dominate the airport car rental lots, independent car rental agencies can thrive at off-airport sites by offering flexible pricing and services to meet customer needs.

One local independent, Auto Value Rentals, has found its niche in the Cedar Rapids rental market by providing larger vehicles in response to temporary customer needs for greater capacity.

The company, a division of Cassill Motors, originally was formed to provide a rental option for body shop and service department customers whose cars were out of commission. Today its fleet of 15-passenger vans and minivans accounts for 75 percent to 80 percent of its rental volume, according to manager Lowell Underwood.

Industrywide, the composition of the rental fleet has remained relatively stable in recent years in terms of the types of vehicles offered, said Chris Brown, executive editor of Auto Rental News. If anything, the trend has been to smaller cars.

“A lot of the past five years has been dictated by fuel prices. Everyone wanted small cars, which was a real headache for car rental companies,” Brown said. “There are less SUVs in the fleet than five years ago.”

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