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Rental Car Companies Face Challenges In Age Of Ride-Sharing Services

KELLY MCEVERS, HOST:

Despite the rise of these ride-sharing companies, the traditional rental car industry is fighting back. And they might be winning. Here's NPR's Sonari Glinton.

SONARI GLINTON, BYLINE: I'm standing in the middle of a rental car parking lot. But it doesn't look like you'd imagine a rental car parking lot.

LOGAN HOFFCAMP: Well, it's filled with Rolls-Royces, Bentleys, Ferraris and Mercedes.

GLINTON: OK, and tell me your name.

HOFFCAMP: My name is Logan Hoffcamp, and I work for Beverly Hills Rent-A-Car. You say, I need a Lamborghini. I need it now. We'll have it to you as soon as possible.

GLINTON: How much is a Lamborghini going to run me?

HOFFCAMP: Our Lamborghinis start anywhere from 1,400 a day up to 3,500.

GLINTON: A day.

HOFFCAMP: Per day, yes.

GLINTON: 1,400 a day - I can buy a car.

HOFFCAMP: When you're dealing with a half-million-dollar car, that's the rate.

GLINTON: Ride-hailing services surpassed rental car companies with business travelers this year. But revenues from rental car companies have grown. What explains this seeming paradox? Well, rental car companies have broken free of the airports. It's not just luxury car rentals, but the rental car giants expanded their branches into urban and suburban areas. Hoffcamp says you can get TVs or a case of diapers delivered to your door - why not a car?

HOFFCAMP: The idea that you can get anything, you know, exactly what you want delivered in two hours is what we do at Beverly Hills Rent-A-Car, is we go for that exact product. That's where everything else needs to move. I think that's where the industry needs to go. I mean, that's that exact vehicle to your door, exactly what you want. And I think that's something Hertz doesn't offer.

JEFF FOLAND: The rental car business is alive and well.

GLINTON: Jeff Foland is with - you guessed it - Hertz.

FOLAND: So for example, even in a market like San Francisco where ride sharing is fairly mature, we haven't seen a market change. And we are renting cars at about the same level today we did a few years ago. And in fact, the market continues to grow.

GLINTON: Foland says one of the things that the rental car companies have on their side is experience in a tough part of the business - fleet management.

FOLAND: Hertz has been in the car-sharing space with hundreds of thousand cars and tens of millions of customers for a very long time around the world. We've been in business for almost a hundred years. We know a thing or two about car sharing.

GLINTON: What's exciting to consumers is the whole buyer experience - think apps on your phone versus long lines at the airport. But Alec Gutierrez with Kelley Blue Book says it's the boring stuff like fleet management that makes money for traditional rental companies.

ALEC GUTIERREZ: From a cost management perspective, the rental car companies are best suited to manage large fleets of vehicles which ultimately allows them to keep costs down.

GLINTON: Gutierrez says the rental car companies make money on the gas, the insurance, the car washes. They buy cars in bulk. Then they make money renting them. And then they sell them at a profit. Knowing how to move and maintain and make money off the cars - fleet management - Gutierrez says is the future for the car business, especially if you're a rental car company.

GUTIERREZ: Because they have the experience in managing large fleets of vehicles, negotiating contracts to purchase large fleets of vehicles at cost, at scale, and ultimately as autonomous vehicles come online and really, truly reshape the way we think about car ownership and fleet management, it's the rental car companies that are best positioned for long-term success.

GLINTON: The guys at Beverly Hills Rent-A-Car have let me at least sit in a Rolls-Royce Dawn. It costs about $330 thousand, and I tell you, you can't get further from the rental car line at the airport than this. Sonari Glinton, NPR News, Beverly Hills. Transcript provided by NPR, Copyright NPR.