Car Rental Outfits Head in a Green Direction

International_herald_tribuneJohn Donnelly and Matthew Spolar The Boston Globe
Published: August 9, 2007

WASHINGTON: Faced with sluggish rentals of sport
utility vehicles and eco-conscious consumers demanding cars with higher
gas mileage, auto rental companies have scrambled in recent months to
stock their fleets with more fuel-efficient vehicles — including
cutting-edge hybrid vehicles and flex-fuel cars that run mainly on
ethanol.

Analysts of the rental car industry say that the number of "green"
vehicles still represents a small fraction of the overall fleet, but is
on a rapid upswing, growing from a few hundred vehicles last year to
more than 6,000 today.

"SUV sales in general are on a significant decline. Some rental
companies are practically giving SUVs away just to get people to drive
them," said Neil Abrams, president of Abrams Consulting Group, which
follows the auto rental industry. "Because of the price of fuel,
leisure travelers are leaning more toward smaller cars with higher fuel
mileage. It’s become a hot subject — each of the companies are touting
their sensitivity to the subject."

But going green can come with a price: Some rental car companies
that have hybrid vehicles on their lots charge more to rent them than
for standard economy cars. And though companies say the savings in gas
can offset that premium, those savings might pay off for the renter
only after driving long distance.

Enterprise Rent-A-Car, which promotes its "unparalleled fleet of
fuel-efficient vehicles," says it has purchased 3,000 Toyota Prius
vehicles this year, with another 1,500 on order. Officials also said 47
percent of its fleet, or more than 334,000 vehicles, get 28 miles per
gallon or more, and the company now has 41,000 vehicles that use
ethanol fuel.

Last month, Enterprise opened an E85/FlexFuel branch in Washington,
where half of the 100 cars in that fleet use fuel that is 85 percent
ethanol alcohol and 15 percent gas.

Pat Sistrunk, of College Station, Texas, rented a flex-fuel car at
the Enterprise branch late last week. She was in the capital with her
husband, Laurence, who was to perform in a concert at the Washington
National Cathedral.

She said she had rented an ethanol-fueled car before and was pleased
to have saved money on fuel and to have a car that polluted less. The
flex-fuel cars produce roughly 20 percent less carbon dioxide emissions
than a gasoline-fueled car, but a hybrid car — one that runs on
electricity as well as gas — is her preference.

"The next one I’m looking for is a hybrid," she said, slipping behind the wheel of her four-door Chevrolet Impala sedan.

Auto rental officials said they are hearing a similar message more
frequently: Consumers are asking for vehicles with higher gas mileage
and frequently requesting hybrids.

"It’s a recent phenomenon. There’s a shift going on," said Paula
Rivera, spokeswoman for the Hertz Corp. "A lot of people concerned with
gas mileage, or concerned with the environment" are asking for smaller,
more fuel-efficient cars.

The race to add more hybrids, in particular, to satisfy drivers
concerned about global warming and high gas prices, has run into a
small speed bump: Toyota, the largest seller of the gas-electric hybrid
models, cannot fill all the orders, limiting the availability of those
rentals in New England and many parts of the country until later in the
year or 2008, officials said.

Toyota, which said it had not sold any Prius hybrid cars to the
rental fleet before this year, was faced with thousands of orders it
could not fill for the 2007 Prius and hybrid Highlander. "We just don’t
have enough supply," said spokesman Bill Kwong.

The company declined to release sales numbers, saying hybrids
comprised 4.7 percent of its 2007 fleet sales, large-quantity buyers
including rental car companies, businesses, and the government. Company
officials project hybrids could climb to 7 percent of its fleet sales
next year.

Hertz purchased 1,000 Prius hybrids this year and expects to have
3,400 in its lots nationwide by the end of 2008. It also has started a
"Green Collection" line of vehicles, in which the average fuel
efficiency is 31 miles per gallon. Hertz distributes its E85
ethanol-fueled cars to regions in which the fuel is more widely
available, mostly in the Midwest.

Avis Budget Group, which says half of its entire fleet of rental
cars have fuel efficiency ratings of more than 28 miles per gallon, has
purchased 1,000 Prius cars as well. It has distributed them largely to
locations in California, Seattle, Portland, Ore., and Washington, D.C.

And National Car Rental and Alamo Rent A Car currently rent 650
Prius and 400 Toyota Camry sedans, almost all in Western states, said
Charles Pulley, communications director for Vanguard Car Rental USA,
which owns both companies.

Both Enterprise and Hertz offer hybrid vehicles in Greater Boston,
but officials said customers who want them need to make reservations
well in advance because of the small number of vehicles.

Pat Farrell, a spokesman for Enterprise, said his company wished it
had more. "The demand is so great for hybrids that it has made it very
difficult for big fleets like ours to buy them in significant numbers,"
he said. "We have been clamoring for them for at least three years."

Abrams noted the "premium" some companies charge for hybrid
vehicles. Enterprise says it does not charge a premium if customers
want a hybrid car, but Hertz adds $5 to $10 per day to rent a Prius,
and others charge even more, depending on the rental market or the
availability of the desired car. ‘The pricing is fluid," Abrams said.
"It depends on what’s in the inventory and what’s available. Prices go
up and down."

Hertz says that the higher cost helps offset the higher purchase
price of a Prius and that fuel savings can make up for the higher
price. For example, in a four-hour trip from Boston to New York with
gas at $2.83 a gallon, a Prius renter would save about $21.39 on gas
compared with the driver of a Ford Taurus, one of the rental industry’s
most popular cars that gets an EPA estimated 20 miles per gallon.

Still, "Consumers are fickle," Abrams said, adding that he believes
the price of gas is a major reason for the increased demand in more
fuel-efficient cars. "Will car renters spend a little more to rent
these cars? We’ll see."

Chris Brown, managing editor of trade publication Auto Rental News,
was also skeptical. "Car rental companies are all about holding costs,
married with demand," Brown said. "With environmental and safety
initiatives, consumers can say they want these things and then not
necessarily pay for them. If [companies] say they’re going to put 500
in their fleet, that’s a drop in the bucket."

At Ronald Reagan Washington National Airport last week, several car
renters did not know hybrids were available. Some said they felt
uncomfortable with a hybrid, because they didn’t know enough about
them. "I’m not against it, but I’m at a wait-and-see position," said
Bill Mangels, 63, of Denver.

Terry Walsh, 50, of Chicago, said he would be interested in renting
a fuel-efficient vehicle if he knew he had a choice. He wondered why
rental companies haven’t gone greener. "It probably doesn’t cost them
any more to acquire a green vehicle than anything else," he said.

Bill and Rachel Johnson, both 59, photographers from Minneapolis,
spent a half-hour at a Hertz car counter trying to find a car or SUV
with good gas mileage. But the company had little available. In the
end, they settled for an SUV that averages 14 miles per gallon.

They left frustrated.

"You seem to get the impression from most car rental places that
they are going to be less likely to be offering high-mileage vehicles
than they are other types of cars," Bill Johnson said.

——–

The original article was posted at International Herald Tribune: Business by Josh Donnelly and Matthew Spolar.

No Responses to “Car Rental Outfits Head in a Green Direction”

  1. This is going to be one of th4 most interesting trends in the car industry and car rental industry as well.
    I hope this comes to a point where our country could be reached by this significant event in history.

  2. It seems to me that SUV’s nowadays are universal cars all year round, which can be rent from Enterprise Car rental. Take it and the probs are finished
    Nick

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