CUSTOMER SATISFACTION SURVEY: J.D. POWER SPEAKS HOW TO IDENTIFY AND PREVENT INSURANCE FRAUD RAC PROFILE: INSURANCE FIRM RENTS REPLACEMENT VEHICLES
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table of contents January / February 2011 • Volume 24, No. 1
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14
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FEATURES 14 How to Identify and Combat
DEPARTMENTS 4
The Car Rental Show is about entrepreneurs.
Rental Fraud Insurance expert teaches you how to identify rental “red flags” and protect yourself against fraud.
16 2011 Car Rental Show Preview: Riding the Wave of Change The market is rebounding. Are you poised to take advantage of new opportunities? Speakers and seminar topics announced.
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22 Understanding Customer Satisfaction J.D. Power and Associates’ Stuart Greif talks about the 2010 North America Rental Car Satisfaction Study, how RACs were graded and why brands achieved the scores they did.
Guest Editorial Bob Barton of ACRA shares New Year’s resolutions for the car rental industry.
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Industry News Lawsuit against Avis Budget purchase of DTAG; NHTSA investigates vehicle recall repairs
24
Car Rental Q&A How to identify, report and document airport locations’ requirements for working with disadvantaged business enterprises
18 RAC Profile: Synergy Success The synergies between an insurance firm and a Hertz Local Edition lead to a successful rental operation in a small town.
Editor’s Corner
26
Product and Vendor News
28 30 32
Used Car Prices Ad Index RentAlert Industry embraces electric vehicles
AUTO RENTAL NEWS (ISSN 1075-9409) (USPS 011-305) (CDN IPM# 40013413) is published bimonthly with additional issues in February and December, by Bobit Business Media, 3520 Challenger Street,Torrance, California 90503-1640. PERIODICALS POSTAGE PAID at Torrance, California 90503-9998 and additional mailing offices. POSTMASTER: Send address changes to Auto Rental News, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 8 weeks for address changes to take effect. Subscription Prices - United States $25 per year; Canada $30 per year; Foreign $75 per year. Single copy price - $10; Fact Book - $30. Please allow 6 to 8 weeks to receive your first issue. Bobit Business Media reserves the right to refuse non-qualified subscriptions. Please address Editorial and Advertising correspondence to the Executive Offices at 3520 Challenger Street, Torrance, California 90503-1640.The contents of this publication may not be reproduced either in whole or in part without consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission. Printed in USA
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editor’s corner What I Get from the Car Rental Show CRS is all about the entrepreneurs who make this industry tick—the risk takers and profit makers. Their energy is contagious.
A
casual search for the definition of entrepreneur turns up phrases such as: “Someone who organizes a business venture and assumes the risk for it.” “The art or science of innovation and risk taking for profit in business.” “Willing to take risks in order to make a profit.” Two words stand out in those definitions: risk and profit. If you own your own business, those concepts are entwined. Those in car rental know this all too well. Who gets into such a capital-intensive operation that is beholden to the volatility of the automotive industry on one side and the fickle American public on the other? Are you people crazy? Don’t answer that. If you’re reading this, at the very least you’ve figured out how to survive the recession. Entrepreneurs in the car rental industry gather at the Car Rental Show. They come to rub elbows with other entrepreneurs who have found a niche or opportunity and have seized it. They come to roll up their sleeves and share what works and what doesn’t in a structured forum with other entrepreneurs from across the country. These entrepreneurs come to gain the market intelligence needed to be able to turn those risks into profit. CRS is all about the entrepreneurs who make this industry tick. It’s about licensees such as Don Burgner, Kenneth Wright and Bob Barbush, forefathers of the franchise system when Americans were just beginning to understand the concept of renting cars. It’s about Moises Behar, who runs Hertz’s largest franchise in Mexico and is pioneering the local market through a groundbreaking partnership with Wal-Mart. It’s about
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BY CHRIS BROWN
Chris McIntyre, who worked out of his garage and with partner Jeff Brown formed EagleRider, the world’s largest renter—and buyer—of Harleys in the U.S. CRS is about people who are figuring out new technologies to save you time and money, such as New Jersey-based Dollar licensees Sarah and Steven Romanowski who have integrated the iPad into their rental check-out process. It’s about Sharky Laguana, founder of indie rock band Creeper Lagoon. Laguana started Bandago Van Rentals, which caters to touring musicians and is doing it green. And then there’s Matthew Holowinski, who left his post as a top salesperson for Avis in Chicago to start his own RAC with one car, no location and no financing. He’s about to move into a new location to serve O’Hare and will be listed on some major travel portals. I’ve met all of those people at the Car Rental Show. It’s energizing to be in a room with people who are driven to succeed. It’s contagious. And you can bet you won’t get that through an email or a telephone call. When I get back in the office I’m amazed at how much useful information I’ve picked up in such a short amount of time. I get a year’s worth of articles for the magazine. I’ve gone from zero to 60 on the industry scuttlebutt in two days. I return with a new perspective on an ever-changing industry. And, as much as the show is content driven, it’s really the people I’ve met who have made this possible. Calling all you risk-taking entrepreneurs: I look forward to seeing you in Las Vegas this coming March to hear your success story. We hope to make you even more successful.
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guest editorial New Year’s Resolutions Bob Barton, president of the American Car Rental Association, asks the car rental industry for discipline, consensus and cooperation on the things that, if implemented, will benefit the industry as a whole.
T
he holidays are typically the time of year when we like to look back, reflect on the past and create resolutions and goals for the new year. This is no different for the car rental industry except that, frankly, we could all accept a little dose of reality. Residual values are at record levels and we are all reaping the benefit of this, but we didn’t cause that to happen. Fleet levels, across the industry, have come down to more rational levels. While some want to take credit for that, I would suggest that 35 percent credit enhancements (if credit was available at all), and discipline on the part of the manufacturers in righting their own ships had more to do with this than we did. Taxes continue to challenge our industry. But to its credit, at least Southwest Airlines told Charleston, S.C., “We don’t want your car rental taxes.” We won, thanks to Southwest, but we didn’t cause that to happen either. New York wants to stop the industry from allegedly discriminating by having different rates based upon where people reside. This interesting concept is one being practiced by every municipality that charges airline customers a tax on car rental to fund stadiums, pet projects and budgetary shortfalls that their voting constituents will not have to pay. Sen. Bill Nelson (D-FL) openly asserted that foreign tourists come to America, rent cars, get in accidents and then leave the Florida resident with no insurance holding the bag. That alone justifies the repeal of the Graves Amendment. As a former insurance commissioner, Sen. Nelson should know that every rental in the state of Florida, regardless of the residence of the driver, comes with the state-required financial responsibility limits as set by the state. Ironically, most inbound Europeans tend to purchase a voucher rental that includes SLI, giving that Florida resident access to a $1 million policy if the accident was caused by the foreign tourists — substantially more coverage than the average citizen of Florida currently maintains. The year 2010 was definitely a transition year for the industry, and we have made great strides in efficiency and profitability, although some are not getting the message with pricing as low as $9 per day for a car in Phoenix during the first week of December.
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BY BOB BARTON
So, moving forward, what should our resolutions be for 2011? ■ DISCIPLINE ● Do not over fleet to service the peak. That never, ever works in the long run. ● Price your product to earn a fair return. Garnishing market share in the long run never works. ■ IMPLEMENT ● Let’s implement a no-show program with a credit card deposit similar to the hotel system. Stop the “I can’t, because they won’t” argument. It’s long overdue! All hotels follow this, and all airlines collect the ticket fare at the time of reservation. It has to start somewhere. Wall Street has talked about the financial impact on the public companies. Every operator can run his or her business better without a 35 percent no-show factor. ● Let’s implement an industry-approved car classification system similar to Europe’s. A Cobalt cannot be a compact and an intermediate; a Versa cannot be an economy and a compact. What is even more ridiculous is when one company classifies the same vehicle in different categories in different cities. ■ COOPERATE ● We are our own worst enemies when we choose not to work together on legislative and taxation issues. The “What is bad for _____, is worse for everyone else” attitude is so passé. ● Attend the Car Rental Show and find a way to address issues facing the industry collectively. Frankly, we get targeted because everybody knows how dysfunctional we are as an industry. We all run our businesses differently. That is a good thing. We can collectively support standards and challenge taxation, legislation and regulation collectively like every other industry does. In the long run it will be better for our companies, our employees and, most importantly, our customers. The airlines have infuriated the customers with bag fees, seat fees, snack and drink fees and boarding fees. No wonder they are fed up by the time they come to get our cars. Let’s put the “customer” back in customer service. These are the things I want for car rental. Let’s make them our New Year’s resolutions.
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industry news Dollar Thrifty Names New Board Chairman Dollar Thrifty Automotive Group Inc. announced Nov. 29 that Thomas P. Capo will be succeeded as chairman of the board by Richard W. Neu, effective immediately. After more than 20 years’ association with Dollar Thrifty and 13 years as a director, Capo notified the company that he intends to retire from the board at the 2011 annual meeting of stockholders. Neu has been a director of Dollar Thrifty since February
NHTSA to Investigate Rental Car Recall Repairs The National Highway Traffic Safety Administration launched an investigation in November to determine how quickly car rental companies fix recalled vehicles. NHTSA said it will review nearly 3 million vehicles manufactured by General Motors, Chrysler and Ford that were sold to car rental companies. The agency said the investigation will give “an indication of how completely and how quickly rental car fleets, in general or individually, perform necessary recall-related repairs or other remedies on the vehicles owned and then leased for use on the roadways.” The Center for Car Safety and Consumers for Auto Reliability and Safety filed a petition with the FTC in August to stop Enterprise and its parent company from renting out unrepaired recalled vehicles to customers. Enterprise spokeswoman Laura Bryant told the Detroit News the company would cooperate with NHTSA in any inquiry involving current practices. Currently, no federal law requires rental car companies to fix vehicles before they return to service, Sharon Faulkner, executive director of the American Car Rental Association, told the FAULKNER Detroit News.
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2006, and most recently served as chief financial officer, treasurer and director of Cleveland, Ohio-based Charter One Financial Inc. Dollar Thrifty also announced on Dec. NEU 6 several executive promotions, which are effective Jan. 1, 2011. For more information, see the story in “Products & Vendor News” on page TK.
Lawsuit Filed to Block Avis Budget From Acquiring Dollar Thrifty Three Dollar franchisees filed a lawsuit Dec. 1 against Avis Budget Group to block its attempt to acquire Dollar Thrifty Automotive Group. The lawsuit, brought by James Cassan, Cassan Enterprises, CMC Investments and Todd Investments, states that the acquisition is in violation of the Clayton Antitrust Act. Cassan is the part-owner and president of Cassan Enterprises, which owns a Dollar franchise and a fleet of rental vehicles that it leases to CMC Investments and Todd Investments, according to the lawsuit. CMC Investments and Todd Investments operate Dollar-Rent-A-Car franchises at Seattle-Tacoma International Airport in Seattle and Portland International Airport in Portland, respectively. The lawsuit states that the acquisition will lessen competition, increase prices, reduce supply, and negatively impact service. Furthermore, it will create a monopoly in the rental car industry and adversely impact business travelers and consumers at airports throughout the country, the lawsuit states. The plaintiffs also filed a similar lawsuit against Hertz Global Holdings Inc. and Dollar Thrifty on Sept. 23 with the same complaint.
Lawsuit Addresses Auto Renters’ Credit Card Charges for Toll Road Use A North Carolina man is suing The Hertz Corp. in a federal lawsuit that could resolve the question of whether renters’ credit cards can be charged, without their consent, for toll road use, according to theNewspaper.com. Dwight Simonson is suing Hertz for allowing American Traffic Solutions to place charges on customers’ credit cards without their consent. Simonson rented a Hertz automobile in Orlando, Fla., in 2009 and was billed $10.75 by ATS for a 75 cent toll. Since 2005, Hertz and ATS have operated a program called PlatePass, which allows renters to use toll roads with a built-in payment system. Simonson complains that all Hertz renters are automatically enrolled without notice. Automatic service fees can be $2.50 to $3 per day, even on days customers do not use any toll roads. Customers only see the charges after they return their rental car. PlatePass is never specifically identified on the standard agreement that Hertz renters sign, nor does the agreement mention that fees are automatically imposed even when the service is not used.
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industry news Bills Target Alleged Auto Rental Geographic Discrimination Two New York lawmakers want to stop car rental companies from charging higher rates to residents living in certain boroughs of the state, according to the New York Post. Two car rental companies out of 11 that do business in the five boroughs — Thrifty and Dollar — charge Brooklyn, Queens and Bronx residents an additional fee based on their residence. Staten Island and Manhattan residents are not subject to any extra fee. Claiming geographic discrimination, state Sen. Daniel Squadron, Assemblyman Brian Kavanagh and Manhattan Borough President Scott Stringer say the car rental companies are taking advantage of consumers and penalizing those who live beyond Manhattan. State bills that Squadron and Kavanagh are sponsoring would make it unlawful for car rental companies to charge customers more based on where they live. Thrifty and Dollar charge the additional fee for consumers renting in New York state, Newark, N.J. or Philadelphia. The fee applies regardless of where the customer intends to drive the rental car.
Hertz Offers Smart Fortwo EV, Partners With CODA Automotive
SMART FORTWO ELECTRIC DRIVE
The Hertz Corporation started renting smart fortwo electric drive vehicles in December through Connect by Hertz car sharing in New York City. The Hertz Corporation and smart USA, a subsidiary of Penske Automotive Group Inc., announced a joint partnership on Dec. 6 to bring smart fortwo electric drive vehicles to Connect by Hertz car sharing and Hertz Rent A Car locations in New York, Washington, D.C., and San Francisco. The vehicle placements are part of the Hertz Global EV program, which will offer a variety of 100 percent electric and plug-in hybrids to car sharing and rental customers worldwide. Hertz also announced in November a new partnership with CODA Automotive, a car manufacturer that specializes in all-electric vehicles. Hertz will add the four-door, five-passenger all-electric CODA Sedan to its California locations in 2011.
Experts Forecast U.S.Travel Industry to Recover in 2011 Experts forecast that the U.S. travel industry will recover in 2011. However, one drawback of the recovery would be higher airfare and hotel rates, according to AHN. One indicator contributing to the anticipated rise in the travel industry is this year’s lifting of travel restrictions by companies as their finances improve. Experts expect the trend to continue in 2011. As a result, airlines are reimposing stricter contract terms and requirements, while corporate discounts are shrinking. Industry insiders warned of a 2 to 6 percent hike in domestic air fare and a 3 to 7 percent increase in international air fare. More Americans are traveling in 2010, according to a yearly Zagat survey released Nov. 29. The survey found that more than 8,000 frequent fliers reported they averaged 17.4 air trips this year, up from 16.3 in 2009.
Enterprise Holdings Joins Electrification Coalition Enterprise Holdings announced that Chairman and CEO Andrew C. Taylor has joined the Electrification Coalition — a nonpartisan, notfor-profit group of business leaders representing the entire value chain of the growing electric vehicle (EV) industry. The coalition seeks to address concerns raised as a result of the nation’s dependence on petroleum. Other members include top CODA SEDAN executives from leading companies including Cisco Systems Inc., Eaton Corp., PG&E Corp., Nissan Motor Company, Johnson Controls, FedEx Corp., and Siemens Corp. The coalition released a report in November detailing the importance of fleet owners and operators to the wider effort to electrify the transportation system. Enteprise Holdings announced in July that it will begin adding 500 Nissan LEAFs to its fleet in December, and said in October that it will also add up to 100 CODA Sedan EVs in 2011.
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industry news
Rental Car Fee Fails in Charleston, S.C.
FOX Announces Launch of Affiliate Program FOX Rent a Car launched its new Affiliate Program on Nov. 1 and hired industry veteran Jeff Wedemire to manage the program. Wedemire has nearly 30 years of experience in the WEDEMIRE car rental industry. For the past four years, he was director of reservation and revenue for a U.S.-based car rental company. He has also been a district manager for National Car Rental and Thrifty in Halifax and Calgary, Canada, as well as an account manager for VIP International. In addition to FOX’s announcement about Wedemire, the company said its Mexico Affiliate opened on Nov. 1 at three locations — La Paz Airport, Loreto Airport and San Jose Del Cabo Airport — with more to come in the future.
A proposed 5 percent rental car fee in Charleston, S.C. failed at the Dec. 7, 2010 Charleston County council meeting with only one vote in favor of the fee, according to WCSC TV. The Charleston County council approved the fee earlier in the year as an incentive for discount carrier Southwest Airlines to come to Charleston. But the measure was tabled when airline officials said it was not necessary. One councilman requested the proposed fee appear on the Dec. 7 agenda because he wanted to go on the record as voting against it after Southwest Airlines rejected the offer.
Kelley Blue Book Names Winners of 2011 Best Resale Value Awards Kelley Blue Book, a provider of newand used-vehicle information, selected the all-new 2011 model-year vehicle winners of its annual Best Resale Value Awards. These awards are given to vehicles that are expected to maintain the greatest proportion of their original list price after five years of ownership. Low-volume vehicles and vehicles with a manufacturer’s suggested retail price of more than $60,000 are excluded from award consideration, except in the luxury and high-performance categories.
■ 2011
Best Resale Value: Brand Subaru ■ 2011 Best Resale Value: Luxury Brand BMW ■ 2011 Best Resale Value: By Vehicle Category ● Subcompact Car: Honda Fit ● Compact Car: MINI Cooper ● Mid-Size Car: Honda Accord ● Full-Size Car: Ford Taurus ● Near-Luxury Car: Lexus IS ● Luxury Car: Audi A5 ● Sports Car: Subaru Impreza WRX ● High-Performance Car: Ford Mustang GT ● Hybrid/Alt. Energy Car: Volkswagen Golf TDI ● Compact Utility Vehicle: Honda CR-V ● Mid-Size Utility Vehicle: Toyota FJ Cruiser ● Full-Size Utility Vehicle: GMC Acadia
Luxury Utility Vehicle: BMW X5 Hybrid/Alt. Energy Utility Vehicle: BMW X5 Xdrive35d ● Mid-Size Pickup: Toyota Tacoma ● Full-Size Pickup: Ford F-Series Super Duty ● Van: Toyota Sienna ● Wagon: Subaru Outback ■ 2011 Best Resale Value: Top 10 Models ● ●
Audi A5 BMW X5 ● BMW X6 ● Honda CR-V ● Jeep Wrangler
Lexus GX Lexus RX ● Subaru Outback ● Toyota FJ Cruiser ● Toyota Tacoma
●
●
●
●
Residual values used for award calculations are based on the November/December 2010 Kelley Blue Book Residual Value Guide. Top 10 models appear in alphabetical order.
ALG Selects Subaru, Infiniti as Top Brands for Residual Value Awards ALG, a provider of residual values and depreciation data, announced its 12th Annual Residual Value Awards on Nov. 17, with Subaru and Infiniti taking the awards for top mainstream and luxury brands, respectively. Japanese models also continued their overall dominance of the awards, winning 12 of the 19 individual vehicle segments. ALG’s Residual Value Awards honor the vehicles in each segment that are predicted to retain the highest percentage of their MSRP after a conventional three-year period. This year’s awards are based on 2011 model year vehicles. 2011 Residual Value Segment Winners: ● Subcompact – Honda Fit ● Compact – Hyundai Elantra ● Midsize – Subaru Legacy
Sportscar – Mini Cooper Countryman Alt-Fuel – Volkswagen Golf TDI ● MPV – Honda Odyssey ● Compact Utility – Subaru Forester ● Midsize Utility – Subaru Outback ● Fullsize Utility – Mazda CX-9 ● Midsize Pickup – Toyota Tacoma ● Fullsize Pickup – Ford F-Series Super Duty ● Near Luxury – Acura TL ● Luxury – Lexus LS 460 ● Luxury Sportscar – Nissan GT-R ● Luxury Alt-Fuel – Mercedes-Benz E Class BlueTec ● Luxury Compact Utility – BMW X3 ● Luxury Midsize Utility – Land Rover Range Rover ● Luxury Fullsize Utility – Infiniti QX56 ● ●
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©2010 Dollar Rent A Car, Inc. All rights reserved. 5310 East 31st Street, PO Box 35250, Tulsa, OK 74135. Phone 918.665.3930. Dollar features a wide selection of quality vehicles. This advertisement is not an offering. An offering can be made by a prospectus filed with the Department of Law of the State of New York. This information is in no way intended to encourage the breach of any contractual obligations you may have. MN REG. No. F-2447.REP. NO. F-1308
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HOW TO IDENTIFY AND COMBAT RENTAL
FRAUD
Insurance expert teaches you how to identify rental “red flags” and protect yourself against fraud.
Do you have the tools to identify which of your customers are trying to defraud you?
BY HOWARD J. HIRSCH
D
oes fraud really affect car rental agencies? The simple answer is yes. The Insurance Information Institute states that 10 percent of all losses are fraudulent. That equates to higher insurance premiums for everyone. Fraud exists, but it is not easy to detect. Take the real-life scenario below. Fraud was not evident when the loss was first reported to our insurance group. It appeared to be just another RLP (renter’s liability protection) rear-end accident and claim involving a rental car. There was even a police report but something seemed amiss. The renter and driver lived very close to one of the occupants of the vehicle that was rear ended. A closer look revealed that the accident involved two rental cars, which were rented from different companies but within the same ZIP code. The police report was quite thorough and listed five individuals in the car that was rearended and four individuals, not including the driver, in the insured rental. That made five potential claimants and 25/50 limits that were quickly disappearing in a morass of bodily injury claims. Liability was clear and somehow everyone had the same lawyer. Upon further investigation, all nine potential claimants were guests of the state penitentiary system and had served prison sentences that overlapped. An educated guess was that they thought of this scheme in their spare time and executed their plan once they had finished paying their debt to society. Thankfully, the “red flags” were identified and this claim was referred to our special investigation unit. The property damage was paid,
PHOTO: ©ISTOCKPHOTO.COM/DANLEAP
but none of the nine potential injury claims were ever paid. If my staff had not been properly trained in fraud awareness and detection, $50,000 could have been paid out. Insurance company claims departments are continually trained in fraud awareness and detection process. In California, every newly hired employee, regardless of function, has a one-hour mandatory fraud awareness and detection training. Rental car agencies do not usually ask many detailed questions prior to renting a vehicle. Additionally, counter agents are always eager to sell extra liability insurance and any collision waiver coverage. Staged-accident rings like to use rental cars because they don’t cre-
EDUCATE YOURSELF! The American Institute for Chartered Property Casualty Underwriters has an online educational portal, http://www.aicpcu.org. A number of valuable courses can be taken online that help educate individuals in the area of fraud detection and awareness. There are also numerous online continuing education resources where employees can obtain detailed training in the area of fraud detection and prevention.
ate paper trails tying particular vehicles to the claimants in the accident. Additionally, only some of the rental car insurers utilize the ISO ClaimSearch system — a master database of all property and casualty claims utilized by the majority of insurers — to track all accidents and claimants.
Hard vs. Soft Fraud Insurance fraud can be classified as either hard fraud or soft fraud. Hard fraud occurs when someone deliberately plans or invents a loss, such as a collision, auto theft, or fire, which is covered by his or her insurance policy in order to receive payment for damages. Criminal rings are sometimes involved in hard fraud schemes that can steal millions of dollars. Soft fraud, which is far more common than hard fraud, is sometimes also referred to as opportunistic fraud. This type of fraud consists of policyholders exaggerating otherwise legitimate claims. For example, when involved in a collision an insured person might claim more damage than was really done to his or her car. Soft fraud can also occur when, while obtaining a new insurance policy, an individual misreports previous or existing conditions in order to obtain a lower premium on his or her insurance policy. The main concern for rental car agencies
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is hard fraud. This usually takes the form of staged accidents or fake bodily injury claims. This also includes personal injury protection fraud, which not only includes the renter, passengers and claimants, but the treating doctors and lawyers representing these individuals. The question then becomes, “How can the fraud be avoided?”
Identify Rental “Red Flags” Through our experience in the rental industry, there are certain “red flags” common to many fraudulent rental claims. Here are the “red flags” that a rental counter agent can look for to help identify a rental that may turn into a staged or fraudulent accident: The customer owns a vehicle, but it is not being serviced or repaired. The customer inquires about extra insurance before it is offered. The customer is a walk-in and does not own a vehicle. The customer has a local address and an out of state license. The customer only requests a one-day rental. The customer pays in cash. The customer pays for the rental with someone else’s credit card. The customer presents a foreign driver’s license with no passport.
• • • • •
she returns the vehicle. Obtain a list of all passengers in the rental vehicle. Obtain e-mail addresses, cell phone numbers and complete contact information for the renter and all passengers. Provide as much information as possible to the insurance company. While there is no feasible way to prevent all fraud, taking appropriate steps in identifying
• • •
potential fraud, along with continual employee training will help to mitigate a rental agency’s vehicles from being used in fraudulent or staged accidents. Reduction in fraud will help keep insurance rates low and lead to greater profitability. Howard J. Hirsch is vice president of claims at Knight Insurance Group. Hirsch is a licensed California attorney with more than 21 years of experience in the insurance industry.
EXAMPLES OF INSURANCE FRAUD
• Phony injury claims: Criminals lie about the harm they or others have
sustained in an accident. Inflated damage claims: Criminals falsify the extent of damage or the true cost of repairs to their vehicles. For example, an insurance cheat adds previous damage to a legitimate claim, or conspires with a body shop and/or claims adjuster to pad a repair estimate. Phony thefts: The owner simply abandons a vehicle and then claims it was stolen (known as an “owner give-up.”) Staged accidents, such as the intentional rear-end collision. Falsely claiming a one-car accident was a “hit and run.” Inventing injuries to people who were not even in the vehicle at the time of the accident (known as jump-ins.)
• • • • •
• • •
ACG DID WHAT?
Protect Yourself So what can a counter agent do to protect against fraud? The easy answer is, if something seems amiss, do not rent the vehicle. The proper training of counter staff will help to identify potential situations that may lead to fraudulent or staged accidents. Identification of the “red flags” listed will help to eliminate some fraud. I also suggest communicating with local law enforcement to help identify specific fraudulent schemes that may be present in a particular locale. Your fleet and renter’s liability protection insurance carrier is also an excellent resource for training. While all fraud cannot be avoided, some simple steps can assist the insurer in combating suspected fraud. Obtain a detailed accident report from the renter and take photos of the rental vehicle documenting all physical damage. Obtain police, fire department, paramedic and ambulance reports. Take photos of the renter when he or
• •
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2011 CAR RENTAL SHOW PREVIEW: RIDING THE WAVE OF CHANGE PHOTO: ©ISTOCKPHOTO.COM/EPICSTOCKMEDIA
The market is rebounding. Are you poised to take advantage of new opportunities?
BY CHRIS BROWN
W
hen a big wave washes onshore, it has the potential to smash what lies in its path. When the wave recedes, what’s left looks nothing like it did before. And so it was with the Great Recession, crashing ashore, dismantling infrastructure and rearranging the landscape as we know it. The car rental industry—and the automotive industry—have undergone unprecedented changes in the past two years. If you’re reading this, you’ve survived the tsunami. But now what? Are you a big wave surfer, or are you still being hit by them? The 2011 Car Rental Show (CRS), presented by Bobit Business Media and the American Car Rental Association, is structured to provide car rental operators with the tools to take advantage of opportunities in the wake of the new economy. To be held at the Las Vegas Hilton March 8-9, 2011, CRS is once again jam-packed with education, information and networking.
Larry De Shon and Jack Fitzgerald to Keynote This year’s keynote presenters will tie together the moving parts of the car rental industry from both the corporate and independent perspectives. Delivering the opening keynote address on Tuesday afternoon will be Larry De Shon, vice president of operations at Avis Budget Group.
De Shon oversees all domestic car rental operations as well as quality assurance and field security for two of the largest and most wellknown brands in the travel industry. De Shon brings to his address a unique perspective from his experience in the airline and car rental industries. Prior to joining Avis Budget Group, De Shon was senior vice president of airport operations at United Airlines. As the head of United’s worldwide airport operations, he led an organization of 23,000 employees in 29 countries. Jack Fitzgerald of Fitzgerald Auto Malls will present this year’s closing keynote address on Wednesday afternoon. Fitzgerald, owner of one of the largest dealer groups in the country, bought Rent-A-Wreck in 2006 and has been working successfully to reinvigorate the well-known brand name. During the Chrysler and General Motors bankruptcies, Fitzgerald was a leader in the fight by rejected auto dealers to keep their franchises. Always outspoken, Fitzgerald will present a no-bias, candid discussion of recent events affecting the entire automotive industry while encouraging audience participation. This is your time to “sound off!”
●
Preconference Seminars Return
General Sessions
Once again, CRS presents two preconference seminars at no extra charge to maximize attendees’ show value.
The CRS general sessions present topics that are of importance to attendees from all facets of the industry.
Tennant Group Roundtable The Tennant Group Roundtable is the industry’s premiere forum for car rental operator members to improve efficiencies and maximize profits in their businesses. The Roundtable returns to CRS to share its expertise in a two-hour preconference workshop. In this roll-up-your sleeves seminar, attendees will have the opportunity for a one-on-one analysis of their operating and financial data by an experienced, non-competing Roundtable member. These statistics will be aggregated into a customized, anonymous report that will be shared with the group. ●
Welcome International Operators A pre-conference seminar and networking session for international car rental operators will also return for 2011. Hosted by Angela Margolit of Bluebird Auto Rental Systems, this two-hour session, for international operators only, is designed exclusively around the unique and diverse challenges facing overseas operators. International attendees will understand the latest technologies, selling techniques and trends that they can take back to increase revenue and enhance productivity in their operations.
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●
The Business Case for Going Green In a special Wednesday morning breakfast address, Lee Broughton, director of corporate sustainability for Enterprise Holdings, will lay out the case for economic, social and environmental sustainability, or “the triple bottom line.” With the increasing proliferation of environmental regulation and legislation, Broughton will impart the need for the car rental industry to develop a sector-specific position on sustainability reporting and transparency before the industry is likely mandated to do so. ●
Ask the Manufacturers This panel discussion will present the state of the automotive industry from the manufacturers’ perspective. Panelists from domestic and foreign OEMs will provide insight into auto rental fleet sales, changes in model mix, new model offerings, build-out dates, residual value projections and more. Hear from and ask questions to the OEMs themselves. ●
ACRA Update and Panel Discussion Join Sharon Faulkner, the newly appointed executive director of the American Car Rental Association, and the ACRA board of directors for an open forum on today’s issues directly affecting your operation and the auto rental industry as a whole, from legislation and taxation to standardization and policy consensus. This is your chance to cause action and affect change through your association.
Concurrent Seminars The concurrent seminars allow attendees to choose a topic with specific relevance to their organization. More seminars are being added as of press time. ● Carsharing – Extending Your Reach, Improving Your Margins Carsharing is the global transportation phenomena estimated to be an $8-10 billion industry worldwide within the next decade. Carsharing requires lower overhead and utilization while offering tantalizingly high RPUs. Neil Abrams, president of Abrams Consulting Group and Julian Espiritu, managing director of its carsharing advisory services business unit, will explain the carsharing business model, the competitive landscape, its performance drivers and value propositions. Whether or not carsharing should be integrated into your operation,
WHAT’S YOUR BIG IDEA? The Profit Making Idea session is back by overwhelming demand! Members of the Tennant Group Roundtable will each present an idea that has been proven to directly improve profits in their car rental operations. Seminar attendees will also have an opportunity to present a pre-approved idea. Attendees will receive a handout for each idea presented and will vote for the best idea. The winner will be announced at the end of the closing keynote address and will receive a free pass to a future Car Rental Show!
you must be educated by the experts on this cutting-edge rental business offshoot. ● Innovative Marketing Techniques for Independents Marketing and training gurus Jim Davis and Tom Sabol of Leslie Saunders and Associates presents a hands-on session designed specifically for independents and entrepreneurs to maximize their shoestring marketing budgets. Attendees will take home ideas on how to generate referral business and buzz through local media, explore sponsorship opportunities with the highest ROI and motivate employees to be “brand advocates.” ●
Legal Rulings and Your Business Politicians, lawmakers and judges had their eyes on you in 2010! Leslie Pujo and Michael LaPlaca of LaPlaca Law PC will tackle today’s hot legal and legislative topics, including CDW price regulation, the recovery of vehicle licensing costs, new insurance steering regulations, increases in rental car taxes, special treatment of foreign renters and much more. ●
High Risk, High Reward: Renting Exotics Everyone looks good in a fast car—but will they work in your rental fleet? Noah Lehmann-Haupt and Rob Ferretti of Gotham Dream Cars, one of the nation’s preeminent exotic car rental companies, present an insider’s analysis of the considerable challenges and rewards of renting exotic and luxury cars. Timid operators need not attend.
Vegas, baby!
●
Turbo Boost Your Fleet Plan Are you running your rental operation as efficiently and profitably as you can? Are you utilizing your fleet in the best way possible? When is the best time to pull rental vehicles from service? What are my vehicles’ replacement costs? Is it better to run vehicles in fleet longer or replace them with new cars? Greg Lubrani, business line director at OPENLANE and Dave Arney of Vehicle Rental Consulting Group provide solutions for those questions and more. ● Rental Car Satisfaction Recovers – Now What? Stuart Greif, vice president and general manager for J.D. Power and Associates’ Global Travel and Hospitality practice, will share emerging trends and insights from research recently performed by J.D. Power and Associates as well as point to opportunities for rental car companies to better address customer pain points. Greif will use examples from other industries to emphasize ways that car rental companies can learn and apply lessons to raise their performance and differentiate themselves. ● Five Profit Boosters and Five Profit Busters of Incremental Sales When it comes to running a successful operation the little things add up. Whether you’re overcoming a customer’s objection, stating your location’s name in your opening phone greeting or having the correct incentive plan, getting the small details and techniques right can lead to big time results! In this interactive workshop, experts from the Frontline Performance Group will review five time-tested profit strategies and will caution operators on which five common day practices to avoid.
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The synergies between an insurance firm and a Hertz Local Edition lead to a successful rental operation in a small town. BY JUSTINA LY
SYNERGY SUCCESS
B
eing the only rental location in a town of 20,000 people has its advantages. Just ask Brady Krueger, who runs a Hertz Local Edition in Newton, Kan. His operation is dedicated to insurance replacements. Krueger says small towns can be difficult locations for rental operations to succeed on their own. “If other 20,000-population towns are like we are, I don’t think [bigger rental agencies] could afford to have an exclusively automobile rental agency sitting in that town,” he says. “You just can’t run the volume, so to attach it to another existing business is a way to spread your name.” In Krueger’s case, his Hertz Local Edition operates alongside his insurance agency, Krueger Insurance Management. The property and casualty insurance firm handles personal and commercial lines of insurance for individuals, manufacturers, contractors and municipalities, including the city of Newton. The company also represents several insurance companies, including Allied Insurance, and is a Progressive “Signature Agent,” making it one of the national insurer’s top agencies. Krueger says his two businesses have operational synergies. They share the same office building and personnel. More importantly, the insurance agency can supply its clients with insurance replacement vehicles on the spot. “It’s really a nice deal,” he says. “That’s why we started [the car rental operation] in the first place…we just felt like that was one more piece of customer service for the insurance agency.”
Getting Into the Rental Game Before Krueger had the Hertz operation, he got his insurance rentals from local, independent car rental agencies. Then insurers switched from independent operations to national brands. “Our rental cars first came from Wichita, which is about 20 miles away. Then
Sheryl and Brady Krueger are coowners of a Hertz Local Edition in Newton, Kan. The rental agency, which is dedicated to insurance replacements, was only the second one of its type operating in the state of Kansas at the time.
they started coming from Hutchinson, which is about 35 miles away,” he says. He didn’t have a problem accepting rental cars from nearby cities, but he did have a problem when the cars wouldn’t show up on time for his customers. After a couple of years of receiving customer complaints, Krueger decided to set up his own car rental agency. He first contacted Enterprise about setting up shop, but was turned down due to competitive reasons regarding established nearby territories. Krueger reached out to other car rental companies, including Hertz, and received immediate interest from the company. “They responded really quickly, really positively, to us,” he says. “I think our timing probably could not have been better…it was right when they were really starting to get into the insurance replacement business.” In 2002, Krueger and his wife Sheryl opened a Hertz Local Edition. It was only the second one operating in the state of Kansas at the time. The rental operation has its own dedicated office and rental counter separate from the insurance agency. The Hertz logo and photos of cars are prominently displayed on the wall behind the rental counter. On the outside of Krueger’s
office building stands a Hertz sign and the insurance agency’s sign side by side. Krueger didn’t have to add full-time personnel to get up and running in the rental car operation. “Our existing insurance staff takes care of the daytime rentals and returns,” he says. “We have a dedicated Hertz telephone line and whoever’s not on another line will be the one who answers that.” The rental operation stays open an hour later than the insurance agency, so Krueger has two part-time rental employees who oversee the counter and clean rental cars during that time. Sometimes, Krueger will join in and clean the cars, too. “It’s a good wind down after the day. You sit behind a desk and you’re on the phone all day. You’re doing, in some cases, some pretty intense insurance stuff,” he says. “And so, if I get in an hour of crawling under dashboards and seats cleaning stuff and whisking around the vacuum and all of that, that’s a nice little end of the day stretch out.”
Benefits of Insurance Rentals As an independent agent, Krueger’s rental operation operates differently from traditional franchise operations. For one thing, he
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doesn’t have to worry about fleet acquisition. Hertz provides him with rental vehicles, so he doesn’t have to purchase his own. He says he usually keeps four to seven vehicles at a time, but no more than that. Krueger also doesn’t have to handle any vehicle maintenance or repairs. His rental operation is 20 miles from Wichita, where Hertz has a regional office, so the company sends drivers to pick up rental cars when they need service. “They’ll send a driver down here with a good car, and he will take back the car that’s in need of service. So, we don’t do anything,” he says. An additional benefit is that, along with his regular commission, Hertz pays Krueger a separate fee for cleaning his vehicles.
Creating Small-town Success While Krueger may have fewer operational responsibilities than his traditional franchise peers, success as an independent agent comes largely based on how he markets his rental operation to the local public. He promotes the rental and insurance agencies together in advertisements that appear in
Jerry Vetter, a part-time employee at Krueger’s Hertz Local Edition, cleans one of the rental vehicles. the local newspaper, two phone books and the high school sports programs. In ads primarily dedicated to the insurance agency, Krueger will include a couple of lines to promote the rental business along with the Hertz logo and the car rental dedicated telephone number. The consistent advertising has paid off as Krueger rarely has unused or extra vehicles sitting on his lot. “We’re usually not sitting there with a lot of spare automobiles. And it’s just amazing how many times we run out,” he says. In addition to insurance rentals, which ac-
count for 25 to 30 percent of total business, Krueger says locals will rent vehicles for vacations, business trips or when their own cars are in the repair shop for non-insurance reasons. “The other insurance agents in town, they will send people down here for rentals as well,” he adds. Krueger says whatever profit the rental operation generates, he divides and shares with his full-time and part-time staff at the end of the year. He says any decline in his car rental business won’t hurt him or his employees. “It’s not going to affect anyone’s livelihood if there’s a drop off in the car rental business. The insurance agency does just fine all by itself,” he says. “The Hertz income is a fraction of this office’s total revenues.” Krueger also owns and operates a 7,200-square-foot storage unit facility next door to his office building. However, he still appreciates the supplemental income from his Hertz Local Edition operation. “It’s a bonus—a nice sized bonus—at the end of the year,” he says.
HOW TO EDUCATE CONSUMERS ON THE BENEFITS OF LOSS DAMAGE WAIVER One benefit of having insurance professionals running a car rental operation is that they know how to best explain the benefits of a loss damage waiver to drivers.
PHOTO: ©ISTOCKPHOTO.COM/KLH49
“We have a bit more knowledge of loss damage waiver than if customers were asking about it at the local airport,” says Brady Krueger, owner of a Hertz Local Edition and Krueger Insurance Management in Newton, Kan. “We know how the auto policies work and what the advantages of buying the loss damage waiver is compared with relying on your auto policy.” Krueger’s frontline personnel inform renters that if they don’t purchase a loss damage waiver and rely on personal auto policies, they will first have to pay their collision deductible after an accident.Then they face additional damage charges from the car rental company.The RAC will likely tie up their credit cards until it receives insurance reimbursement—and that usually won’t happen until the insurance company gets a copy of the police report and has a chance to talk to all parties involved in the accident.These charges can add up, especially with credit card interest rates. Krueger says Kansas is a comparative negligence state, which means that fault is not necessarily absolute and could be assigned on a percentage basis to drivers in the accident.This increases the chances of fault in any accident. Drivers who are found at fault may pay even more out-of-pocket, non-reimburs-
able expenses in addition to their collision deductibles: If a renter’s reimbursement coverage is $30 a day and he or she crashed a rental that goes for $45 a day, he or she would pay an additional $15 out of pocket. In addition, the rental agency may go after the driver for administrative fees and diminution of value charges, which are excluded from personal auto policies. Learning the Hard Way Krueger recounts one insurance client who learned his lesson the hard way. The man rented a vehicle in California and didn’t purchase the loss damage waiver. He got involved in a traffic accident with a big rig and the incident took about three months to resolve. During that time, the car rental company he used had charged his credit card for nearly $10,000 worth of damages. “The loss damage waiver, if you take it, it’s pretty much you come in, you fill out the little report …and walk right back out the door. No expense out of pocket,” Krueger says. “We always recommend a loss damage waiver. It’s just a vastly superior way to protect yourself than it is to rely on your own auto policy.”
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UNDERSTANDING
CUSTOMER
SATISFACTION J.D. Power and Associates’ Stuart Greif talks about the 2010 North America Rental Car Satisfaction Study, how RACs were graded and why brands achieved the scores they did.
BY CHRIS BROWN
O
verall customer satisfaction with rental cars has returned to prerecession levels after declining to lower levels during the past two years, according to the J.D. Power and Associates 2010 North America Rental Car Satisfaction Study released in November. Now in its 15th year, the study measures overall customer satisfaction with renting cars at airports by examining six factors (listed in order of importance): costs and fees, pick-up process, rental car, return process, reservation process and shuttle bus/van. Overall satisfaction averaged 750 on a 1,000-point scale in 2010. This is an improvement from 733 in 2009 and 734 in 2008, equal to the 2007 overall score, yet below the 767 score in pre-recession 2006. Satisfaction with the reservation process, pick-up process, shuttle bus/van and costs and fees achieved three-year highs. Each of the rental car companies included in the study has improved in 2010 compared with 2009. Enterprise ranked highest in customer satisfaction for a seventh consecutive year and performed particularly well in all six factors. Enterprise is followed in the rankings by National and Hertz, respectively. In addition to increased satisfaction with rental car companies in 2010, customer loyalty and advocacy have also improved from 2009. In 2010, one-third of business travelers and 28 percent of leisure travelers indicated they “definitely will” rent from the same brand again—marking increases of 2 percent and 5 percent, respectively, from 2009. Advocacy rates have increased by 3 percent among business travelers and 6 percent among leisure travelers from 2009. In
2010, 30 percent of travelers in both groups say they “definitely will” recommend their rental car company. Stuart Greif, vice president of the travel practice at J.D. Power and Associates and the director of the study, spoke with Auto Rental News to explain the survey and put some qualitative analysis behind the numbers.
The Economy Matters The roller coaster economy has had a huge influence on overall scores in the past few years. “The macroeconomic conditions affecting both business and leisure travel as well as consumer discretionary spend have a demonstrable impact [on scores],” says Greif. “They pose the greatest challenge when revenue is down when [car rental companies] are looking at how to reduce operating costs and manage profit through a downturn. “By quickly improving their operations as the market started coming back, rental car companies started reversing the negative impact on satisfaction that cuts and deferred investments had during the downturn,” says Greif. “Satisfaction snapping back in 2010 is a testament to the industry doing its best to balance the tension between customer sat-
Stuart Greif of J.D. Powers and Associates will present a seminar on how rental operators can improve their performance and meet customers’ needs at the 2011 Car Rental Show in Las Vegas, March 8-9.
isfaction and hard economic realities during this period.” Economic conditions affected satisfaction scores in other travel industries, says Greif, though scores in airline surveys were bumped up somewhat during the economic downturn. That’s because lower airfares and smaller passenger loads resulted in less congestion at airports and on planes, as well as fewer checked bag problems and fewer complaints with baggage fees. Nonetheless, airline scores were still much lower than in 2006, before the onset of baggage fees.
Fewer Problems Reported Incidence of reported problems decreased to 9 percent in 2010, compared with 11 percent in 2009. Vehicle pick-up and billing had the highest rates of reported problems. “It’s important to note that 22 percent of problems experienced by customers go unreported, which means there was never an opportunity to resolve them,” says Greif. “The bottom line is that prevention of problems is a far better strategy than service recovery for achieving high satisfaction levels.”
Scoring Details The seven categories (reservation process, pickup process, return process, rental car, shuttle bus/van, cost and fees and then overall satisfaction) are not weighted equally. Generally speaking, the rental car itself constitutes about 20 percent of the overall score while the return process is roughly about 20 percent. Cost and fees make up about 25 percent, while reservations, shuttle bus and van are not weighted as heavily. Speed makes a big difference, mostly in the pickup and re-
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J.D. POWER AND ASSOCIATES 2010 SATISFACTION STUDY Enterprise
786
National
767
Hertz
762
Industry Average
750
Alamo
749
Avis
738
Advantage Rent-A-Car
731
Budget
729
Dollar
723 713
Thrifty
0
100
200
300
400
500
turn processes, Greif says. Greif’s team derives from each survey which part of the rental experience is most important to the individual respondent and in what proportion. The survey breaks down each of the seven categories into further components. The rental car category has 10 subcategories, for example. One of those is “smell.” If one respondent graded smell with a score of two, (i.e., the car stunk) while other subcategories fared well, and the respondent scored the car overall as only a three, that very low score for smell is weighted more heavily in the overall average. The reasoning is that the bad smell was obviously very important to that renter’s experience.
Brand Inclusion or Exclusion Why are some brands included in some years and not in others? J.D. Power needs at least 100 surveys for the data to be statistically relevant and thus rank a company in the survey. J.D. Power tries to increase the overall sample size of the study as a means to try to include as many brands as possible, time and money permitting, Greif says.
600
700
The 2010 North America Rental Car Satisfaction Study is based on more than 11,500 evaluations from business and leisure travelers who rented a vehicle at an airport location within the previous 30 days. The study was fielded between October 2009 and September 2010.
800
High Rates, Newer Fleets Impact Scores The industry started buying fleet again in the first quarter of 2010, mitigating the trend of high-mileage cars during the recession. Newer fleets factored into higher scores in the rental car category for this year, and Greif expects that positive correlation to continue into next year’s survey. Rental car rates have increased for leisure travel but have held steady for corporate contracts. While high rates are good for the industry, they have an adverse impact on customer satisfaction scores, generally speaking. Higher rates may cause lower scores moving forward. However, “We think that the trend will be more than offset by improvements in the operations regarding sacrifices made during the downturn,” Greif says.
Business Travelers Are Tough Graders
The survey does not officially rank business versus leisure, but J.D. Power does identify respondents on business or leisure trips. In general, business travelers are tougher graders but they tend to be more loyal, Greif says. OVERALL SATISFACTION SCORES Overall, business renters graded 2006 2007 2008 2009 2010 the industry at 738 as a whole, while 767 750 734 733 750 leisure travelers gave a grade of 759. Business* This higher leisure grade is true even 2006 2007 2008 2009 2010 among the brands that focus on the 758 740 720 724 738 business traveler: Avis scored a 722 Leisure* with business travelers and a 755 with 2006 2007 2008 2009 2010 leisure travelers. Hertz scored 744 771 758 744 740 759 for business and 776 for leisure. National scored 771 for leisure, 764 for *Not an official J.D. Power and Associates ranking
business. (Enterprise, for that matter, scored 775 with its business customers and a whopping 792 with leisure.)
Brand Analysis The biggest brand surprise in the 2010 survey was Advantage, which beat out Budget, Dollar and Thrifty in satisfaction. Advantage scored 731 in 2010 compared to 674 in 2008. It is reasonable to surmise that Hertz’s ownership was the main factor in its improvement, according to Greif. Avis, which wins more than its fair share of global travel awards, scored below the industry average again, as it had in 2009 and 2008. While Avis scored solidly in most categories, it ranked a two out of five in the costs and fees category, which lowered its overall score. Even if two rental cars had identical pricing, Greif explains, if one is delivering a better experience for the money, it will tend to have better scores in cost and fees as well. Both Dollar and Thrifty have scored consistently low in this survey as well as in the past few surveys. Part of this may be due to business model and customer segment differences—focusing more on the lower-cost end of the market. At the same time, Greif points out that in the airline industry, on which J.D. Power also conducts similar research, the low-cost carriers such as JetBlue and Southwest rank highest. Greif suggests that there is much that Dollar and Thrifty can learn and apply from how these airlines approach service and how they innovate to make the traveler’s experience more efficient and enjoyable to improve their performance. Enterprise’s feat of seven consecutive wins is remarkable. “Enterprise has really understood what matters to travelers,” says Greif. “The ability to have consistent performance as Enterprise does and to have three of the parent company’s top four brands at the top shows something about the overarching management of the company and how they focus on the customer experience.” As this is an airport-focused study, Enterprise’s “we’ll pick you up” benefit is irrelevant to this data set, though Greif says the RAC probably gains some positive bleed in the customer’s mind from getting picked up in local rental experiences.
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C A R
R E N T A L
Q & A financial assistance, to establish goals for the participation of DBEs. Each DOT-assisted state and local transportation agency is required to establish annual DBE goals, and review the scopes of anticipated large prime contracts throughout the year and establish contract-specific DBE subcontracting goals.” Since 1983, the DOT must ensure that at least 10 percent of the funds authorized for transit assistance programs be expended with DBEs. Since each entity receiving DOT funds must set their goals, the goals vary from airport to airport, but cannot be less than 10 percent. Chicago O’Hare’s goal is 30 percent, while Philadelphia International Airport’s goal is 14.07 percent. So you need to check with your airport to see what the local requirements are and realize that these goals may change from time to time. In addition to establishing goals, state and local recipients also certify the eligibility of DBE firms to participate in DOT-assisted projects.
Reporting and Documentation Talking to people in the industry, the reporting and documentation requirements vary from location to location and they can be extensive. Some facilities require a yearly plan showing how you are going to meet the DBE goals for next fiscal year. This is probably not a bad idea even if it is not required. With a yearly plan, you have a roadmap to check against so you are not caught at the end of the year trying to explain why the goal was not met. The plan should include the DBE suppliers and cost of projected services. It should be reviewed every month to make sure you are meeting your goals. Reporting varies from a single annual report to monthly reports required by airports such as O’Hare. The reports include both the dollar amount purchased from certified DBEs and good-faith efforts to contract with DBEs. All efforts need to be documented and some locations conduct yearly audits. Failure to meet the goals can lead to the loss of the concession. Note: Some information above was obtained from various federal and airport web sites, as well as interviews with present and former rental operators. The requirements for these programs change regularly and you need to get the latest requirements from your local program manager.
Q&A
Q
I’m considering opening an airport location. I’ve been told that the airport authority will want me to provide them with a list of my minority suppliers. What is this about? — Name and location withheld on request
A
In 1953, the U.S. government passed a law that set aside 5 percent of all procurement contracts for small businesses classified as disadvantaged business enterprises (DBE). Since then the federal government has both expanded the size of the set aside and the definition of “socially and economically disadvantaged.” Airports, because they receive funds from the Federal Aviation Administration and other federal agencies, must meet the Department of Transportation’s DBE regulations. The DOT includes these groups in their classification: women, Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian-Pacific Americans, or other minorities found to be disadvantaged by the U.S. Small Business Administration (SBA). From the DOT web site: “The U.S. Department of Transportation’s DBE (disadvantaged business enterprise) program provides a vehicle for increasing the participation by MBEs (minority business enterprises) in state and local procurement. DOT DBE regulations require state and local transportation agencies that receive DOT
PHOTO: ©ISTOCKPHOTO.COM/IOFOTO
Finding Suppliers The airport should be able to direct you to a list of qualified suppliers. For example, the directory for Chicago’s O’Hare is maintained and published by the Department of Procurement Services of the City of Chicago. The DOT has a web page, www.osdbu.dot.gov (click on “DBE Program”) with the DBE liaisons for each state. They should be able to direct you to certified suppliers. An article by Leslie A. Saunders in Auto Rental News (Handbook 2010) on becoming a DBE noted the Airport Minority Advisory Council. The Council’s Web site, http://www.amac-org. com/, has a directory.
Email your fleet-related questions to Auto Rental News care of chris.brown@bobit.com or directly to Eckhaus Fleet at tim@EckhausFleet.com. Eckhaus Fleet is one of the largest independent fleet suppliers to the car rental industry.
24 ARN • JANUARY / FEBRUARY 2011
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ANNOUNCING
Opening & Closing Keynote Speakers:
Session Topics to Include:
The 2011 Car Rental Show
• Marketing Your Business as an Independent
(CRS), is the industry’s
• Car Sharing
premier gathering. seminars, panels and enlightening keynotes provide the tools you need to put your existing resources to work and increase profits! Clear your calendar for March 8-9, 2011 and make sure you join us in Las Vegas!
• Renting Exotic Cars Larry DeShon, Avis Budget Group, Inc.
Jack Fitzgerald, Rent-A-Wreck and Priceless Car & Truck Rental of America
HEADQUARTERS HOTEL: Las Vegas Hilton Hotel 3000 Paradise Road Las Vegas, NV 89109 Rate: $119 (Classic Room) Phone: 800-635-7711 Mention CRS or use code SCRS1R when reserving Expires February 15, 2011
• Legal and Legislative Updates • Manufacturing Panel • The Triple Bottom Line • Customer Satisfaction • Remarketing Panel • Profit Sharing Ideas to Use Today
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products & vendor news CATRALA–Hawaii Elects 2011 Officers, Board of Directors CATRALA–Hawaii has elected its 2011 officers and board of directors. Aaron Medina of Hertz, Garrick Higuchi of Thrifty Car Rental, Nick Tinebra of MEDINA Honolulu Publishing Co. and John Coffelt of Dollar Rent A Car were reelected as president, vice president, treasurer and secretary, respectively.
Name
Title
Company
Aaron Medina Garrick Higuchi Nick Tinebra John Coffelt Dean Matsuoka Dewey Hess Greg Artaho Jim Stone Martin Mylott Reggie Maldonado Don Mackintosh
President Vice President Treasurer Secretary Director Director Director Director Director Director Honorary Member
The Hertz Corp. Thrifty Car Rental Honolulu Publishing Co. Dollar Rent A Car Matson Navigation Co. Manheim Hawaii Budget Rent A Car Law Offices of James J. Stone Avis Rent A Car Pasha Hawaii
To contact CATRALA-Hawaii, call (808) 952-4287 or e-mail catralahawaii@yahoo.com.
Bluebird Adds Card$ense to RentWorks System
Dollar Thrifty Announces 2011 Officer Promotions
Bluebird Auto Rental Systems has fully integrated Card$ense, a payment processing technology, into its RentWorks software system (version four). Card$ense, developed by Element Payment Services, offers rental operators the ability to identify a customer’s payment card type prior to processing the transaction. Based on this information, operators can make informed decisions on how to handle payments, resulting in cost savings and risk reduction. For example, operators can determine how the system should respond to debit cards by selecting: ● No Check ● Notify on authorized-only deposits ● Notify on authorized-only deposits and convert to paid ● Notify on all payments/deposits ● Do not allow Once a debit card is detected, the rental agent will see a message, and the words “Debit Card” will appear in red. With Card$ense, operators can customize their settings based on location. Updates can happen automatically as new card types are added in the marketplace. Card$ense is available for both Acquired and Gateway (TSYS) merchants. Card$ense requires service pack B8 of RentWorks version four, but does not require additional hardware. For more information, visit www.barsnet.com, e-mail sales@barsnet.com, or call 1-800-304-5805.
Dollar Thrifty Automotive Group announced on Dec. 6 the following promotions, effective Jan. 1, 2011: Jeff Cerefice, promoted to senior vice president; Lynne Pritchard, promoted to senior vice president of human resources; Mike Souza, promoted to vice president of corporate operations; Bill Copeland, promoted to vice president of financial planning and analysis; Darren Arrington, promoted to staff vice president of fleet; Joe Colavecchia, promoted to staff vice president of revenue management; and Les Pritt, promoted to staff vice president of corporate operations. “These seven individuals have earned their promotions, all having demonstrated exceptional skills, solid judgment and rock solid dedication to DTG’s long term success. The board of direcARRINGTON CEREFICE tors and I are delighted to announce their promotions within our leadership team,” said Scott Thompson, president and CEO of Dollar Thrifty Automotive Group. COLAVECCHIA COPELAND
Card$ense allows operators to select how the system should respond based on the customer’s type of payment card.
PRITCHARD
PRITT
SOUZA
26 ARN • JANUARY / FEBRUARY 2011
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used car prices
AVERAGE AUCTION SALE PRICE – COMMERCIAL FLEET VEHICLES MID-SIZE CAR
FULL-SIZE PICKUP
FULL-SIZE VAN
SUV
$13,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000
0 0 0 0 9 9 0 0 0 V-0 C-0 -10 -10 R-1 R-1 Y-1 -10 -10 G-1 T-1 T-1 V-1 NO DE JAN FEB MA AP MA JUN JUL AU SEP OC NO
West Central Midwest Northeast Southeast
MODEL
P .R .
SOUTH EAST
NORTH MID WEST EAST WEST CENTRAL COAST
AUDI A4 2008 4D SDN 3.2L QUATTRO 21,300 22,650 BUICK LACROSSE 2009 4D SEDAN CXL 14,000 12,550 2008 4D SEDAN CXL 11,700 13,100 CHEVROLET 1500 SILVERADO 2WD V-8 2009 REG CAB 4.8L 17,650 17,750 2008 REG CAB 4.8L 14,550 13,950 CHEVROLET COBALT 2009 4D SEDAN LS 6,950 7,000 2008 4D SEDAN LS 6,450 6,600 CHEVROLET COLORADO 2WD I5 2008 EXT CAB 3.7L LT 9,700 7,550 CHEVROLET EQUINOX AWD V-6 2009 4D SUV LT 16,700 16,900 2008 4D SUV LT 11,450 12,050 CHEVROLET HHR 2009 4D SUV 2.2L LT 9,150 8,700 2008 4D SUV 2.2L LT 8,300 8,600 CHEVROLET IMPALA V-6 2009 4D SEDAN LS 3.5L 8,850 9,200 2008 4D SEDAN LT 3.5L 7,850 7,500 CHEVROLET MALIBU V-6 2009 4D SEDAN 3.9L LT 11,850 10,950 2008 4D SEDAN 3.9L LT 7,650 6,750 CHRYSLER 300 2009 4D SEDAN 11,650 11,000 2008 4D SEDAN 10,500 10,900 CHRYSLER SEBRING V-6 2009 4D SEDAN LTD 13,900 14,050 2008 4D SEDAN LTD 11,350 10,400 DODGE RAM 2WD V-8 2008 QUAD CAB 5.7L 16,200 15,300 FORD CROWN VICTORIA 2008 4D SEDAN LX 13,600 13,600 FORD EDGE 2009 FWD 4D SE 15,850 15,450 2008 FWD 4D SE 15,500 13,400 FORD EXPEDITION EL 2WD V-8 2009 4D SUV 5.4L XLT 23,700 23,550 2008 4D SUV 5.4L XLT 21,250 20,550 FORD EXPLORER 4WD V-6 2009 4D SUV 4.0L XLT 17,400 16,800 2008 4D SUV 4.0L XLT 12,250 16,050 FORD F-150 2WD V-8 2009 EXT CAB 5.4L XLT 18,450 14,650 2008 EXT CAB 5.4L XLT 13,950 11,900 FORD FOCUS 2009 4D SEDAN SE 8,750 8,600 2008 4D SEDAN SE 8,150 *8,750 FORD FUSION 4-CYL. 2009 4D SEDAN SE 11,300 11,550 2008 4D SEDAN SE 10,700 10,350
22,450
22,900
21,800
12,550 12,050
12,550 12,250
12,550 10,950
18,400 14,100
17,900 14,800
17,150 14,300
7,300 6,700
7,250 6,600
6,550 6,250
7,250
9,400
9,800
16,450 12,100
15,200 10,950
14,850 11,750
9,400 8,200
9,600 8,300
8,900 8,700
9,650 8,050
9,050 7,750
8,300 7,700
10,500 8,100
10,950 7,250
10,950 8,300
12,050 11,600
12,950 11,650
12,600 9,750
13,800 11,450
13,300 11,850
12,550 9,150
14,950
16,100
15,950
11,700
9,500
11,350
16,100 15,400
16,600 15,200
15,000 14,500
23,550 20,550
23,400 19,850
23,550 20,600
17,750 15,050
17,500 13,450
17,150 13,500
15,950 11,900
18,350 13,650
16,650 13,600
8,900 8,850
8,750 8,050
8,750 8,100
11,650 10,600
10,550 9,850
11,450 9,800
THE GRAPH ABOVE REFLECTS ACTUAL AUCTION PRICES RECEIVED BY SELLERS OF COMMERCIAL FLEET VEHICLES. THESE VEHICLES GENERALLY HAVE HIGH MILEAGE. THE TABLE BELOW REPRESENTS THE WHOLESALE VALUES OF MODELS REGARDLESS OF SELLER.
MODEL
SOUTH EAST
NORTH MID WEST EAST WEST CENTRAL COAST
FORD RANGER 2WD V-6 2008 2D EXT CAB 3.0L XLT 11,350 11,200 FORD TAURUS 2009 4D SEDAN SEL 10,700 9,300 2008 4D SEDAN SEL 8,850 9,050 GMC CANYON 2WD 2009 CREW CAB 2.9L SLE 14,400 14,400 2008 CREW CAB 2.9L SLE 14,250 13,900 JEEP GRAND CHEROKEE 4WD V-8 2009 4D WAGON LAREDO 20,000 21,750 2008 4D WAGON LAREDO 15,900 15,400 JEEP PATRIOT 4WD V-6 2009 4D SUV SPORT 11,650 12,650 2008 4D SUV SPORT 11,600 10,900 LINCOLN MKX AWD V-6 2009 4D CROSSOVER 22,500 22,500 2008 4D CROSSOVER 22,200 22,050 LINCOLN TOWN CAR 2009 4D SEDAN SIGNATURE LTD 21,200 21,400 2008 4D SEDAN SIGNATURE LTD 19,450 18,750 MERCEDES-BENZ S-CLASS 2009 4D SEDAN S550 60,700 61,500 2008 4D SEDAN S550 49,650 44,600 NISSAN ALTIMA 2009 4D SEDAN 12,950 12,500 2008 4D SEDAN 12,750 12,250 PONTIAC GRAND PRIX 2008 4D SEDAN 8,000 8,300 PONTIAC VIBE 2009 4D WAGON 8,900 8,400 2008 4D WAGON 7,600 7,600 SAAB 9-3 2009 4D SEDAN SPORT AUTO 16,600 16,600 2008 4D SEDAN ARC AUTO 10,600 10,700 SUBARU OUTBACK 2008 4D WAGON 2.5L LTD 17,700 18,050 TOYOTA CAMRY V-6 2009 4D SEDAN LE 12,150 12,600 2008 4D SEDAN LE 12,750 12,600 TOYOTA PRIUS 2009 4D HATCHBACK 14,300 13,150 2008 4D HATCHBACK 11,950 11,350 TOYOTA TACOMA 2WD V-6 2009 DBLCAB 4.0L PRERUNNER 20,700 20,700 2008 DBLCAB 4.0L PRERUNNER 18,150 18,000 VOLKSWAGEN JETTA 5-CYL. 2009 4D SEDAN S 11,400 11,400 2008 4D SEDAN *11,800 *11,450 VOLVO S40 2009 4D SEDAN 2.4L 13,450 13,450 2008 4D SEDAN 2.4L 10,600 10,400
11,850
10,600
11,050
9,250 10,150
11,150 8,650
12,350 8,100
14,400 13,900
14,400 15,050
14,400 11,600
23,100 16,200
22,200 15,900
22,200 15,900
12,200 11,400
12,050 11,350
11,800 9,100
22,500 22,150
22,500 21,500
22,500 21,700
20,250 19,350
19,500 19,350
20,000 20,300
61,050 44,750
64,300 46,900
60,950 47,550
12,850 12,800
13,300 12,300
12,450 12,250
9,200
8,850
7,150
9,300 7,600
8,400 7,600
8,300 7,600
18,250 10,900
16,600 9,700
16,600 10,550
16,600
17,350
17,600
11,750 12,050
12,250 12,300
12,950 11,750
13,500 12,500
13,900 12,700
14,050 12,900
20,750 18,000
20,950 17,300
20,800 18,150
11,900 11,750
11,100 10,850
10,800 *10,850
13,450 10,650
13,450 10,400
13,450 11,600
*VEHICLES NOTED HAVE HIGHER (OR EQUAL) 2008-OVER-2009 VALUES BECAUSE THE AVERAGE MILEAGE OF THE 2008 MODELS GOING THROUGH THE AUCTION IS LESS THAN THE 2009 AVERAGE MILEAGE. DATA PROVIDED BY MANHEIM MARKET REPORT, A DAILY PRICE GUIDE BASED EXCLUSIVELY ON AUCTION TRANSACTIONS. THE DATA IS BASED ON SALES AT MANHEIM’S 80 NORTH AMERICAN AUCTIONS. THE MANHEIM INDEX (MANHEIM USED VEHICLE VALUE INDEX) AT WWW.MANHEIMCONSULTING.COM PROVIDES “TREND” DATA FOR THE MOST RECENT 12 MONTHS AND IS UPDATED MONTHLY WITH COMMENTARY AND SEGMENT ANALYSIS.
28 ARN • JANUARY / FEBRUARY 2011
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ad index COMPANY
PHONE
®
www.autorentalnews.com
WEBSITE
PAGE
Abrams Consulting Group ................ 914-696-5100 .................. abramsconsulting.com .................15
Vice President & Group Publisher Sherb Brown — (310) 533-2451 Executive Editor Chris Brown — (310) 533-2499 chris.brown@bobit.com
Bluebird Auto Rental Systems .......... 800-304-5805 .................. barsnet.com .....................................9
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GMI Insurance Services ..................... 800-722-3229 .................. GMI-Insurance.com........................5
Lancer Insurance ................................. 800-782-8902 x3027...... lancerinsurance.com ...................C3
Senior Editor Justina Ly — (310) 533-2496 justina.ly@bobit.com
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Subscription Inquiries (888) 239-2455
Chairman Edward J. Bobit President & CEO Ty F. Bobit Chief Financial Officer Richard E. Johnson Editorial Consultant Howard Rauch
ADVERTISING MANAGERS
Mile Fleets ............................................. 954-915-9384 .................. Milefleet.com .................................13
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Sonoran National Insurance ............. 866-998-1001 .................. sonorannational.com .....................3
Great Lakes Robert J. Brown 1000 W. University Dr. Ste. 209 Rochester, MI 48307 (248) 601-2005 Fax: (248) 601-2004
Toyota .................................................. 800-732-2798 .................. fleet.toyota.com...........................C4 Printed in the USA
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All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission. acra
The Advertisers’ Index is provided as a courtesy to Auto Rental News advertisers. The publisher assumes no responsibility for errors or omissions.
30 ARN • JANUARY / FEBRUARY 2011
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rent ALERT
FOR UPDATES,VISIT WWW.AUTORENTALNEWS.COM
Industry Embraces Electric Vehicles Car rental companies further corporate environmental initiatives by adding EVs to fleets. BY JUSTINA LY
E
lectric vehicles (EVs) splashed onto the automotive scene in 2010 and some car rental companies quickly embraced them as part of larger corporate environmental initiatives. Last year, the Hertz Corporation and Enterprise Holdings announced plans to add EVs to their respective fleets in the United States and started introducing plug-in vehicles to rental and carsharing customers. Both Hertz and Enterprise have partnered with Nissan and are incorporating the automaker’s all-electric LEAF into their fleets. Nissan says the four-door, five-passenger vehicle can achieve 100 miles when fully charged. Enterprise started adding 500 Nissan LEAFs to its fleet in December. Enterprise said the LEAFs would initially be available in seven markets — Phoenix, Nashville, Tenn., San Diego, Los Angeles, San Francisco, Portland, Ore., and Seattle — where the infrastructure exists to support the vehicles. Hertz says it will roll-out the LEAF at select rental sites in the United States and Europe by early 2011. Hertz and Enterprise have also partnered with CODA Automotive, a privately-held company based in Santa Monica, Calif., which manufactures the all-electric CODA Sedan. The automaker claims the vehicle achieves a range of 90 to 120 miles per charge. Hertz says it will add the four-door, five-passenger all-electric CODA Sedan to its California locations this year. Enterprise also said it plans to add up to 100 CODA Sedan EVs to its fleet this year. In addition, Hertz has partnered with smart USA, a subsidiary of Penske Automotive. Hertz began renting smart fortwo electric drives to car-sharing customers in New York City through Connect by Hertz. The car rental company will bring additional smart vehicles to other Connect by Hertz and Hertz Rent A Car locations in Washington, D.C. and San Francisco. This recent fleet expansion is a crucial part of the Hertz Global EV program, which was launched last September, and aims to provide a variety of all-electric and plug-in hybrid vehicles to car sharing and rental customers worldwide. In addition to the CODA, Nissan and smart elec-
tric cars, Hertz says it also plans to offer the Mitsubishi iMiEV and the Toyota Prius plug-in hybrid. The car rental company is currently taking reservations for electric vehicles at its exclusive website, www.hertzev.com. Meanwhile, Enterprise announced Nov. 11 that Chairman and CEO Andrew C. Taylor joined the Electrification Coalition, a nonpartisan, non-profit group that promotes policies and actions that facilitate the deployment of electric vehicles on a mass scale. Other members of the coalition include executives from companies including Cisco Systems Inc., Eaton Corp., PG&E Corp., Nissan, Johnson Controls, FedEx Corp., and Siemens Corp. Outside of the U.S., Avis Europe announced last February that it planned to make Renault electric vehicles available for rent starting this year. Avis did not specify which EVs would be available, although Renault planned to introduce four electric vehicles between late 2010 and 2012. With major car rental companies jumping aboard the EV bandwagon, independent and franchised car rental operators are beginning to examine if EVs will work for their businesses. They are analyzing the infrastructure needed to sustain EVs and figuring out how to rent EVs to customers who are comfortable and familiar with gas-powered cars. The electrification of the auto industry is part of the larger issue of corporate sustainability. At the 2011 Car Rental Show, Lee Broughton, director of corporate sustainability for Enterprise, will discuss why the industry must be proactive in seeking economic, social and environmental sustainability, or likely be mandated to do so, which will be more painful and costly than if the industry takes responsibility on its own.
EVs AVAILABLE FOR FLEET Eckhaus Fleet is taking rental fleet orders for the all-electric, highway ready Mitsubishi iMiEV. First deliveries are expected by the fourth quarter of 2011. Complete packages with quick charge units will be available.
32 ARN • JANUARY / FEBRUARY 2011
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With ten Vincentric Best Fleet Value in America awards, Toyota vehicles have won more Vincentric awards than any other fleet automaker. With low maintenance costs and high resale value, selecting Toyota for your fleet means you win, too. Call 1-800-732-2798 or visit toyota.com/fleet
Options shown. Based on Vincentric’s 2010 Fleet Analysis. ©2010 Toyota Motor Sales, U.S.A., Inc.
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