September 23, 2002
Rental Cars' Long 'Test Drives' Can Help Sales in Tough Times
By KORTNEY STRINGER
Staff Reporter of THE WALL STREET JOURNAL
Relying on maps and convoluted directions from gas-station attendants, Marie
Hume frequently got lost while driving in desolate places.
Then she rented a Hertz car with the NeverLost global-positioning system, a
satellite-driven navigation unit that gives detailed directions to
destinations. Within months, the Northridge, Calif., resident became a GPS
devotee, paying a total of about $4,100 for two units -- one each for her
40-foot Monaco Dynasty motor home and her Jeep Grand Cherokee.
"We used to spend so much time getting lost," said Mrs. Hume, a workshop
coordinator who travels the country with her husband 10 months out of the
year. "Now it's like we have an angel giving us directions with every turn."
Another renter-turned-buyer. The rental-car industry has become a powerful
marketing tool for new automotive technologies and new cars themselves
(though in some cases car makers still use rental agencies to dispose of
slow-selling vehicles). And the marketing has proven equally advantageous
for rental operators, who often negotiate for exclusive rights to offer new
cars and products first.
Experts say rental cars are a perfect test-drive for potential buyers. They
say that after driving a rental car for a few days, customers can end up
buying a car and accessories they wouldn't ordinarily consider.
"By putting cars in a rental fleet, you're developing a potential customer
base," said Neil Abrams, president of Abrams Consulting Group, a
Purchase, N.Y., consulting firm for the rental-car industry.
This year, Mitsubishi Motors Corp. released its 2003 Outlander and
General Motors Corp. supplied its 2003 GMC Envoy and Chevrolet
TrailBlazer simultaneously to Enterprise Rent-a-Car Co. and
dealerships. The goal: get more of the SUVs in front of potential
buyers faster. Normally, it takes a few months for new models to
hit rental-car fleets.
|
DUAL APPEAL - Source: car makers, rental agencies
Some vehicles launched in rental fleets and dealerships simultaneously:
* Ford Motor -- 2002 Explorer
* Mitsubishi Motors -- 2003 Outlander
* General Motors -- 2003 GMC Envoy and 2003 Chevrolet TrailBlazer
|
Enterprise, which gets 95% of its business from neighborhoods, rather than
airports, is particularly attractive to car makers because many of its
customers rent cars as insurance replacements. These customers drive the
cars during their normal routines and thus are more likely to influence
their peers' perceptions of a particular model.
Ford Motor Co., which owns Hertz, used the agency last year to push its
redesigned 2002 Explorer replacing a model under fire for safety concerns.
Aiming to boost its tarnished image, Ford seeded the Hertz fleet as it began
shipping the new vehicle to dealers.
"Our view is rental fleets are a great opportunity for passive marketing,"
said Ford spokesman Mark Schirmer. "This is a way for people to get into a
Ford product without having to be in a dealership and having to hear a pitch
from a salesman."
Honda Motor Co. also has been pushing its Insight and Civic Hybrid cars,
which run on gasoline and electricity, into rental fleets. That can help
sales even when it if the renter isn't buying, Honda says.
"First, we view [rental companies] as customers ... and as a secondary
benefit, they're raising awareness to the consumers about these cars," said
Stephen Ellis, manager of Honda's alternative-fuel vehicles.
Honda has sold hundreds of its alternative-fuel vehicles to Budget EV Rental
Cars, a partnership between closely held EV Rental Cars and Budget Group
Inc. and the nation's only company that exclusively rents "green" cars. The
Los Angeles company also rents two cars powered by natural gas, the Honda
Civic GX and a special version of Ford's Crown Victoria, as well as the
low-emission Nissan Sentra and GM's electric EV1. The cars cost the
rental-car company more to maintain and service, but rent at a premium.
Bill Orr never considered owning a Civic Hybrid or Toyota Prius, both of
which get double the highway miles per gallon of his Honda Odyssey minivan,
until he rented several on business trips. Now the manager at the California
Environmental Protection Agency said he's thinking about buying one. The
Sacramento resident also plans to suggest an electric hybrid to a friend
who's looking for a new car.
For Thales Navigation Corp., a closely held Santa Clara, Calif., company
that makes the NeverLost system, being in the Hertz fleet has been the prime
driver of sales of units that average $1,800 each.
A recent J.D. Power & Associates study of 6,000 car buyers who bought
navigation systems found almost one-third had prior exposure to them, with
more than half saying they got that experience in a rental car. Thales said
it sells about 7,000 units a year -- with no advertising -- because about
80% of its customers try its systems in rental cars.
Thales won exclusive renting rights with Hertz, which has Thales systems
installed in 50,000 domestic vehicles. A rental car with the system costs as
much as an extra $8 a day. "We are selling units despite no marketing
activity," said Ajay Prasad, Thales's vice president of vehicle marketing.