Hertz: High Gas Prices Haven't Hurt Holiday Travel
You want to talk about high gas prices? Hertz used to charge its customes $7.99 a gallon to refuel a car. In an interview with The New York Times, the rental car company's chairman and chief executive says Hertz has modified the charge to stop gouging their customers [paraphrasing]. "We are now reducing that to the pump price, which is $4 or so, plus a one-time fee of $6.99," Mark P. Frissora reveals. "We also have a fuel-purchase option. In the past, if you elected to buy the tank of gas in advance, we charged a 10- to 20-cent premium on that tank. But now we give a 15-cent discount to whatever the price is at the pump." Hertz is hoping new customers will cover the lost revenues. But what about the old biz, the vacationeers facing pump shock? "In general, gas prices going up is not a positive thing. However, it is not nearly as negative as you might imagine in rental car land. Typically, the rental car itself and gas are no more than 10 percent of the overall cost of a vacation. We are finding that people aren’t cutting vacations right now. You would think that with gas prices being high, there would be a deterioration, but we haven’t seen that." Yet. In other news, Hertz has just 3k Priora in its Green Fleet; Toyota's hyrbid's residuals are safe. For now.
More by Robert Farago
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I was in Dallas and had a rental Kia Spectra (from Enterprise). It wasn't bad at all, aside from half the radiator being devoid of water and overheating a little. They kept trying to up-sell me to one of the 4 SUVs or pickups they had on the lot. I guess that little spectra was quite in demand. Every customer who walked in demanded a subcompact too.
"How can the mix on the highway change so fast?" Many families have multiple vehicles. One example are relative who have an Accord and a Suburban. In the past, the Accord was the dad's every day commuter car while the Suburban did local kid hauling duty plus any longer family vacations. Now, the family is likely to hit the road in the Accord for long trips instead of in the Suburban. There is also the effect of those who only have a large truck or SUV being more likely to simply not hit the road like they used to. I bet that the percentage of RVs which are parked right now is higher than it has been in July for a long, long time.
I live in Oklahoma and gas is about $3.77. I see plenty of SUVs and large cars on the road. It makes me proud that fellow Oklahomans haven't resorted to metaphorically neutering themselves with underpowered cars. I think the next question of the day should be "What do you think Americans would do if fuel prices dropped below $2.00?"