Can the old hire car industry survive and adapt to 21st Century car rental demands?

Many people are going green these days, with a renewed interest in the environment, and heightened awareness of the state of our natural resources, people all around the world are reacting to this problem. For example, Paris has recently launched an electric car scheme and San Francisco Airport is implementing a new drive to attract green cars to its airport.

However, for some strange reason, the car rental companies have been slow to react to this trend to offer green options to their customers, and while that failing hasn’t hurt them too much in the past, today it’s becoming downright painful as car rental customers are faced with escalating fuel prices that the car rental companies are passing along to them, ironically prices high because the car rental companies have been so slow to take action to minimize them in years past.

In actuality, rental companies, such as Avis have been involved in the movement to go green for many years now. But have their efforts been enough in the past, or will they be adequate in the future?

Enterprise Rent-a-car, National, and Alamo Group, all owed by the Taylor family out of St. Louis, present their customers with a way to offset the carbon emissions of their rental vehicle by allowing them to purchase a carbon offset. The cost is $1.25 per rental, plus the applicable taxes.

The funds collected from these carbon offset vouchers that customers purchase are used to buy certified offset projects that are geared to removing carbon dioxide emissions from the atmosphere, the very same carbon dioxide emissions that those rental cars put there.

Enterprise claims that for every 100,000 customers who purchase these carbon offsets, more than 30 million lbs of CO2 would be offset. When you add to the amount customers are paying to purchase these carbon offsets, the matching funds Enterprise is throwing in (up to $1 million), about half of the carbon produced by Enterprise vehicles could be easily offset.

Enterprise is quick to acknowledge that going green is a lot more than just a public relations gimmick; rather, it’s the only way to stay in business since both the company’s vehicles and the fuel they use must remain acceptable to society. Car rental companies today are struggling with the high cost of fueling their vehicles, and the fact that those costs act as a detriment to customers continuing to rent a vehicle for all trips.

Let’s face it: with the cost of fuel as high as it is, renting a car is no longer a no brainer on every business trip. Business people today are looking at other alternatives such as hotel shuttles to get from their hotel to meeting sites each day, or perhaps a combination of taxis and lifts from colleagues. Even when a group does decide to take the plunge and rent a vehicle, often they will pool that vehicle among a group of them, rather than rent a vehicle for each business traveller.

Car share options are abound these days as well. Zip Car and Car Share are two such services that operate in many major cities. Zip Car is a for profit organization, while Car Share is not-for-profit. Many of their vehicles are hybrids, specifically designed to get better gas mileage to the gallon so as to keep operational costs low.

Car share companies are doing so well these days, in fact, that car rental companies are seeking to figure out ways of getting into the business. The car share companies are run by smart people; young entrepreneurs who saw a market among young people who couldn’t afford to keep a car, yet were too young to rent one from the traditional car rental companies (who generally require customers to be at least 25 years of age). So, they offered their services mainly on college campuses, and because of that they have built a loyal group of customers who eventually graduated, yet still use car-sharing arrangements because of their financial attractiveness.

Since the car rental companies turned their noses up to this substantial segment of the population who were too young to rent a vehicle from them, today they are struggling to win these folks back.

Now that they have graduated from college, and can probably afford the maintenance of a car, many of them don’t want to be bothered, especially since car sharing works great for them. They live in upwardly mobile urban areas where the availability of car sharing is plentiful.

So, car rental companies are beginning to realize what a wonderfully lucrative segment of their potential customer base they’ve given up, and they are now backpedalling like mad to get them back by setting up special programs to appeal to their upwardly mobile needs of today. One of the things they offer is fuel-efficient vehicles, many of them running off of hydrogen-based fuels, and some hybrid vehicles.

The car rental companies realize that these young urban professionals have a very heightened sense of being conscientious stewards of the environment, and that is precisely why they won’t own a car, despite the fact that today, post-college and university, they can easily afford one. To draw this customer base in, the car rental companies have to attract them with clearly green policies in all aspects of their operations, and alternative fuels are just the tip of the (melting) iceberg.

Add to them programs to contribute to the cleaning up of the environment, supported jointly by the customer and the car rental company, as well as other forward-thinking, environmentally sound company policies affecting all areas of the company’s operation, and they might just get them.

Car rental companies today are becoming far greener than they’ve ever been before. There is no question about that. But sadly, it’s often a case of too little too late, and the car rental companies are going to have to make major strides on several different fronts if they hope to survive in this age of high fuel costs and lessening demand for their products.

The car rental companies need to be greener than ever today. They need to reduce their own operating costs so that some of those cost reductions can be offered to their customers in an effort to lure them back, Hertz is starting to take note and it taking a leaf out of Zip Car’s book.

They also need to put more and more emphasis on protecting the environment so as to appeal to the young customer today - the one for whom green policies are very, very important. This is taking hold in the UK with companies such as GreenMotion.

Lastly, car rental companies need to be at the forefront of efforts to develop viable sources of alternative fuels, whether that be through support research efforts, or by conducting some of them on their own.

It is only by taking some of these above-noted steps that the car rental companies can sweep into the new millennium ever profitable and ever performing a viable service to the community which they serve.