The Car Rental Industry - Case Study Example

Choose a car! The car rental industry has grown by leaps and bounds. It is no more restricted to vacation transportation or airport transfers. The industry’s growth has been mostly due to the explosion of the "home-city" rental market (Clarke, 2008). Renting a car gives freedom and flexibility and in some parts of the world this is the only feasible way to move around (Independent Traveler, 2008). People have started renting cars from a neighborhood location and the reasons could be many. It could range from the need for an extra-large truck to move around town or the need for a comfy hauler for a cross-country family trip. It could also be simple weekend furniture shopping or to move around in a glamorous high-end cruiser for a fun-filled night. There are several activities involved in the rental process which starts from choosing the agency to choosing the car and deciding on the rentals, insurance and finally to returning the car. All agencies may not be the same and hence it is advisable to follow ten tips for car rentals. Choosing which car to rent is the first dilemma that most people face. Independent Traveler (2007) advises to first think carefully which car would suffice for the purpose. The size of the car would depend upon the purpose. If traveling with family or children or with a lot of gear, a large sedan would be required. If the purpose can be served with a small car and budget is tight, if the purpose is to save on rental rates and gas, then it is advisable to opt for a small car. The amount of luggage to be carried is also vital in determining which car to rent. Besides, while deciding, the shopping or the purchases that would be made during the trip also has to be taken into account (Car Rental Express (2008). Apart from the size, it is always advisable to take into account the environment-friendly issues. The car must be environment-friendly and have automatic transmission facility. Check out the extras that come with the rentals like a ski rack, a car seat or a GPS system. Other things that usually come with the car are child car seats and additional luggage racks (Car Rental Express, 2008). While you can make special requests and preferences for any particular model of the car, the actual availability of the car model can be confirmed only when you arrive at the counter, says Car Rental Express (2008). Choose your agent selectively Choosing the agent or the car rental company depends upon several factors. Riches (2003) suggests booking a company or the car rental agency based on rates, vehicle availability and service. For frequent travelers and repeat customers, the agencies offer special discounts, faster service and greater choice of vehicles. An occasional traveler is advised to compare rates from different agencies based on the type of car required, the location, the dates and the duration of the trip. The major companies have a wide range of models on offer but if you are looking for a specific model, it is advisable to check on it in advance. If one wants a superior or a luxurious car, it would be worth looking around much in advance as these may not be easily available. When cars are rented out from an airport location, they usually attract airport tax or some surcharge. It may be worth renting it from a non-airport location to avoid surcharges but this would mean traveling up to the rental office. Service is another important consideration and if one has had a pleasant experience in the past with any agency it is advisable to stick to them even if the rates are slightly higher. Small independently-owned companies usually carry exotic models and the rates too are cheaper but before booking with them or handing over the credit card, it would be worth checking on their credentials. This is essential in view of the fact that being a small company they may not have replacement fleet should your car breakdown. Besides, they may not be operating 24x7 which again could pose a problem. Hence, only after checking on these factors, the agency should be decided upon. Do not get trapped in insurance scams While renting a car, insurance policy needs special attention. First and foremost, it is not essential to buy the rental company’s insurance. It is first advisable to check with the credit card company and the car and personal insurance companies. If one already owns a car and pays auto insurance, many things might already be covered in it but this may have certain restrictions and certain rental cars may not be covered (Car Rental Express, 2008). Hence it needs thorough investigation. The regular insurance agent would be the best advisor on this count. In case one does not own a car and hence does not have a regular insurance, it is best to buy the insurance from the car rental company regarding damage and accidents. If the car is rented through the credit card, the credit card companies also provide some amount of insurance. All these need to be investigated before buying any cover. The car rental agencies usually offer a collision damage waiver (CDW) and a loss damage waiver (LDW). The first covers the insured on the collision while the second covers the rental agency against any losses (Clarke, 2008). Both these covers are good but there should be no repetition in case one is already covered. Here one point needs special attention. The collision damage waiver covers ‘loss of use’ which is a charge levied by the rental company to cover the lost income for the period that the car is out of service. Most auto insurance policies do not cover this loss and in the event of any damage to the car, one may end up paying for this cover. Hence it is very strongly advised to investigate before talking the insurance cover. It would also be wise to check whether one needs the personal accident insurance (PAI), personal effects coverage (PEC) or additional liability insurance (ADI) (Travel Sense, 2008). While the PAI covers accidental death and medical coverage for all passengers including the renter, PEC provides protection against theft or loss of personal belongings from the rental car. ADI provides protection to the rental agency against third party claims for death or damage caused by the rented vehicle. Kahler advises it is best to decline the insurance offer as companies make big profits from insurance fees. Some clerks have been trained to create as much anxiety as possible and try to exert influence. They may even try informing you that their cover takes care of the loopholes found in insurance offered by other service providers. To convince the client, they even give examples of some recent clients who faced trouble from their credit card companies. While the entire story may not be untruth, it is presented in a scary way and it is best to understand the consequences instead of getting carried away. Fees and taxes Apart from insurance, there are other fees and charges to be taken into account for the calculation of the total costs (Travelocity, 2008). Rental companies allow gasoline pre-purchase options but it is better not to avail of this option and fill up gas at the nearby gas station before returning the car. The car should be filled up prior to your departure and then bring it back filled up instead of the rental company having to top-off the gas after your return. They usually charge a ridiculous price per gallon (Kahler, 2008). The car is usually booked for an allotted period and the charges calculated accordingly. In the event that the duration of the rent exceeds the pre-determined time, late fees are charged beyond the allotted grace period. Had the rates been special weekday or weekend rates, the pricing would be heavily altered depending on when the car is returned. If the car is dropped off at a location different from where it was picked up, charge would apply. All these have to be checked up at the time of enquiring about the prices. Kahler advises that sometimes the basic rates are much lower but the taxes and other charges are very steep. Hence one should not get carried away seeing that daily rates are under $20 because it signifies some hidden costs. Miscellaneous tips International driving license is not required when hiring a car. Anybody is allowed to rent a car and drive around if one has a valid driver’s license from the home country (Leco, 2007). It may so happen that the car rental company does not recognize the issuing authority for some driving license issued. Under such circumstances, an international driving license helps to convince the rental company about the validity of the driving license. Certain agencies either do not rent out the cars to those under 25 years of age or charge a higher price. There are some agencies that do not rent out cars to those over 71 years of age. These restrictions need to be checked in advance as well. Tuttle (2006) informs that just as airfares can change unpredictably, so can the car rental prices. One must continue shopping around even after making reservation to confirm that one has really got a good deal. The writer managed a saving of $119 on the total costs even though he had already booked with the agency that he has used in the past and was also offered reward programs. All it required was to surf the net and browse and obtain rates from a few other agencies. They immediately dropped the previous reservation and booked with the agency that offered lower rates. Rates in this industry too keep fluctuating based on the demand and the time of the year and hence this is a very interesting tip offered. Unless one is particular about any model or some other facility which may not be available at all rental agencies, it is worthwhile shopping around. A few extra minutes spent could result in massive savings. Upgrades and discounts It would be worth trying a number of time combinations when you consider your rental period (Kahler, 2008). At times the weekend rates may be more expensive and hence it would be worth picking up the car on Thursday even if it is not required until Friday. Picking up on Friday may attract the weekend charges. The rental agencies also allow bidding on car rentals like the hotels but most often the bid rates are similar to the standard rates. Bidding may not save any significant amount on the rates published. Most car rental companies allow for auto upgrades on cars. Hence it is advisable to book a small car initially. Suppose a client has booked a compact, it may so happen that when he arrives at the counter, that compact model is not available. The rental agency is obligated to give the higher upgrade available with them and hence for no extra charge the client gets a free upgrade. When the supply of cars is huge, this plan may not always work but it is worth a try. Apart from upgrades there are discounts available also. Car rental companies offer discounts that range from corporate discounts to those affiliated with hotels and airlines (Widzer, 2008). American Express and AAA have special rates with the car rental agencies. It would be wise to check the monthly airline mileage statement which gives benefits and discounts in car rentals. Then again, the car rental companies offer special promo offers if cars are booked through their website. At each point, whether it is through the website or across the counter, one must remember to mention of the special privileges as members of American Express or AAA to avail of special discounts or promotional offers. Insisting on a non-smoking car increases the chances of a cleaner car and also the chances of upgradation without any extra charges. This happens when a non-smoking car is unavailable in the class of service booked, the client is automatically upgraded to accommodate the non-smoking needs. Never pay extra! Payment is another area where care has to be taken so as not get cheated. Normally, the car rental agency will swipe the card twice – once for the rental amount and the second time the amount is left blank to provide for unforeseen damages (Tomzap, 2003). When the client finishes the trip and returns the car in good condition, one should ensure that the blank charge slip is returned back by the car rental agency or destroyed in the presence of the client. Gold or Platinum credit holders are at times eligible for free car rental insurance which is provided by the credit card company. This should be checked in advance by the credit card company. If one does not have a credit card, most rental companies accept their own prepaid vouchers issued by an appointed travel agent (Travel Sense). Some may even ask for a cash qualification questionnaire to be filled up and verified before they agree to rent out the car. In lieu of the credit card they may ask for a large cash deposit or cash advance that could exceed the estimated charges. These are standards terms but care should be taken to ensure that after the car is returned all accounts are settled before the client leaves the rental company’s premises. Execute the booking The actual booking to be executed is a process in itself. One is advised to make a booking at least a week in advance because as the booking pace increases the rates can go up (Riches, 2003). While making an online booking, Riches advises to search for some code that could save the client some money. Very often special promotional codes can be found on the website which could result in saving from 5 to 20 percent on the normal car rental rates (Independent Traveler). The terms and conditions should be carefully read before confirming the reservation. If booking over the phone, then too the restrictions need to be checked. Various other rules need to be checked which include penalty for no-shows, cancellation rules, delays in picking up the car, whether there are charges for additional drivers and if their names needs to be included. Interstate travel conditions should also be cheeked and whether they have service arrangements in other states should there be a breakdown in another state. Drop-off charges in case of one-way rentals also need to be checked. After all investigations, once reservation has been made, the confirmation number should be obtained. Ready for the journey? Pick up the car!! The formalities have to be completed before the client wants to pick up the car. A confirmation number becomes important both for the car rental company and for the client. The rental company can track the whereabouts of the client in case the car is not picked up on schedule. They could track flight delays and hold the car accordingly. The client could also need the confirmation number in case the car is not given to him as promised. There have been instances when the car has not been delivered as per schedule and the attendants at airport do not even have the confirmation of the booking. Such hassles could be minimized if the client has the confirmation number ready at hand. After presenting the confirmation number, the client must read the terms and conditions properly before signing the agreement. He must familiarize himself with all liabilities and be sure of the payments that are being collected and what may be asked for later as well. Before leaving with the car, the car should be inspected for the correct mileage information and any visible damage to the car (Travel Sense). If any damage has been identified, notation should be made in the agreement or the voucher to avoid hassles at the time of returning the car. Before driving out, familiarize your self with car; adjust the seat and the mirrors, the turn signals, the windshield wipers, the lights and the cruise controls. Check out the controls for air-conditioning and defroster along with the horn placement. Return the car – safe and sound So now you have finished the trip and ready to return the car back to the rental company. You seem to be a little confused as returning of the car also needs knowledge and understanding since problems could arise at any stage. Rates are usually on a 24-hour period with one hour of grace period permitted (Travel Sense). If the car has been retained for four hours beyond the schedule agreement, it is better to extend it for twenty four hours as overtime charges per hour are very steep compared to daily rates. Always fill the gas before returning the car as this ensures that you pay only for the gas used. The price of gas is higher at the stations close to the airport so these may be avoided to economize. It is better to fill it a little away from the city and better still if one could check up where the cheapest gas would be available by logging on to GasBuddy.com. It is pointless returning the car before schedule as it might actually cost you more. One may have to pay early return fee and in addition the rate structure may change and usually the client is responsible for it (Independent Traveler). Before leaving the vehicle one must ensure no personal belongings have been left behind. The most common articles that are left behind include cell phones, sunglasses and umbrella. Even the truck should be carefully checked. The car’s body should be checked in your presence by the rental company’s attendants. Any damage noted should be confirmed by you before they charge you for it. They should immediately credit your account with the excess collected while you wait. This must be ensured before you leave their premises as it is very difficult to track such credits once the deal is over. References: Car Rental Express (2008), Car Rental Concerns - Things To Consider Before Booking, 12 Feb 2008 Clarke, W., (2008), Top 10 Car Rental Tips, 12 Feb 2008 Independent Traveler (2008), Car Rental Tips , 12 Feb 2008 Kahler, M., (2008), Five Tips for Saving Money on a Car Rental, 12 Feb 2008 Leco, M., (2007), Car Rental Tips, 12 Feb 2008 Riches, E., (2003), Tips for Hassle-Free Car Rental, 12 Feb 2008 Tomzap (2003), CAr rental tips, 12 Feb 2008 Travel Sense, (2008), car Rental Tips, 12 Feb 2008 Travelocity, (2008), Travel Tips from A to Z from Amy Ziff, 12 Feb 2008 Tuttle, B., (2006), A car rental tip to remember, Newsweek Budget Travel, Inc. 12 Feb 2008 Widzer, J., (2008), 8 tips for great car rentals, 12 Feb 2008 Read More