By Published on .

Arizona and New Mexico residents recently found they could rent a car at the supermarket.

This marketing ploy, a paean to service and added value at Budget Rent A Car Corp., exemplifies the marketing extremes the $12.5 billion car-rental industry is taking to shore up bottom-lines pressured by tepid business travel and rising fleet costs.

This service-oriented direction has become unusually commonplace.

"The industry hasn't been known for its level of customer satisfaction," admits John Power, senior VP-sales and marketing at Budget.

Budget's supermarket delivery program, introduced last October in Smith's Food & Drug Center stores in Phoenix and Albuqerque, is one of the ways Budget is trying to change perceptions among consumers.

Since the rental booths entered the grocery aisles, the Smith's locations have reported 25% more bookings than standalone offices in those markets.

The industry's frontier may well be the local market, according to John LeSage, executive editor, Auto Rental News. Local market is parlance for everything that's not airport/near airport; accounts for 29% of the market; and is growing at an annual 10%-15% clip. It's less price-sensitive and competitive than the saturated airport/near airport segment, growing only 1% to 2% a year, according to Plog Research.

Enterprise Rent-A-Car has grown dramatically in the local-market segment with successful overtures to the insurance/replacement market. Enterprise recently switched from targeting insurance agents and auto body shops to wooing consumers with a $22 million "Pick Enterprise. We'll pick you up" campaign. Enterprise picks up customers at the repair site or home.

Hertz Corp. recently introduced an insurance/replacement program of its own via a local rental subsidiary called Hire Hertz in Boston and Los Angeles.

Budget also is trying to get local market consumers to think of rental cars in new ways by offering gift certificates for special occasions, a program it's taking worldwide.

Thrifty Car Rental, with 50% of its business local, bills itself as "Your neighborhood Thrifty car rental." It recently shifted the focus and media orientation in its advertising from predominantly men to 50% women when its research found women booked about half the cars in local markets. It also beefed up its fleet of pickup trucks and 15-passenger vans.

"We could grow that market as fast as we could get these vehicles in our fleets," says Bob Dimmick, VP-marketing and sales.

The value-added message is aimed in large part at the dominant but slow-growth airport/near-airport business. The big-bucks network campaigns are aimed at this sector, too.

Last October, Avis Rent A Car System introduced on network TV the Return Valet program, a passenger drop-off service at terminals. Hertz responded in November with print ads for its equivalent, Curbside Return.

Hertz and Avis introduced onboard navigation systems in select vehicles and markets this year. National Car Rental System has followed suit, testing a system in Cadillacs in Atlanta and Detroit. Budget is exploring in-car catalog shopping.

Another nontraditional effort was launched by Alamo Rent-A-Car, which in June introduced a World Wide Web site, allowing customers and travel agents to access rate and availability information and make reservations online.

Meanwhile, the industry seems determined to seek higher rates. Periodic attempts by the majors to boost rates have soured when some competitors clung to their bargain-basement prices.

Car-rental companies have experienced cost increases of up to 30% each year since 1992, and rates have risen only about 5% in five years. A big reason for increased costs is the end of sweetheart deals from Detroit's Big 3 automakers.

The automakers also are rethinking their corporate ties to rental companies. This spring, General Motors Corp. sold National to NCR Acquisition Corp. and Chrysler reorganized Thrifty and Dollar Rent A Car, a move seen as making the companies more attractive to prospective buyers.

Maybe even a supermarket chain.

Most Popular
In this article: