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ACRA Panel: A Rational, Safe Way to Handle Recalls

At the 2011 Car Rental Show, the American Car Rental Association convened on a panel on Wednesday afternoon to break down the issues facing the industry collectively.

- For this year's panel, the major hot button issue was safety recalls, in the wake of Charles Schumer's introduction of federal legislation to ground all recalled rental vehicles. During the session, ACRA President Bob Barton introduced ACRA's position paper on recalls, which was circulated to the audience. He pointed out that many recalls are unrelated to the drivability of the vehicle (he mentioned a Suzuki recall in which the problem does not call for grounding the vehicle immediately). The ACRA position paper proposes that the current rules be modified to a two-tiered system which can properly categorize each recall by the nature of the defect and the potential for harm.

Barton asked why other industries that use vehicles for business, such as limos and taxis, are not part of the legislation. He pointed out that this is certainly a manufacturer problem as well. "We'll do what we need to do to get some clarity. If the manufacturer determines that we should ground the [recalled] vehicle, we will. But we need OEM guidance to make that determination," he said.

- Faulkner referenced the days when unlimited vicarious liability altered the rental business in New York.  "We lost hundreds of car rental companies because of legislation put against them," she said.

Faulkner referenced HR 4175, the bill that would prevent future predatory car rental taxes through national legislation. "This bill didn't have momentum last year, but with the recent elections we're building momentum," she said.

Faulkner pointed out that there are seven states remaining with primary liability, in which the owner of the rental car is first to be sued. There is legislation in Arizona and Maryland to make the owner secondary. There are new threats to the Graves amendment in Florida and Maine, she said.

- New board member Gil Cygler of Allcar Rent-a-Car spoke about his years of lobbying on a local level and ultimate success in getting anti-steering legislation passed unanimously in the New York state assembly.

- While the hue and cry is still strong on no-show fees-especially with utilization higher than ever-Avis Budget Group's discontinuation of its no-show transaction experiment has pushed the industry toward adopting a prepay model. A prepay model will give the rental customer a "guaranteed reservation," which is a more consumer-friendly phrase.  

Barton said that ACRA has met with credit card companies to discuss how to implement a guaranteed reservations strategy that mitigates chargebacks and deals with loss of use and diminution of value.

Barton told operators to expect correspondence from credit card processors regarding writing specific language into an RAC's customer communication that characterizes the situation properly, positively and uniformly. 

"They [credit card companies] will honor and support you as a vendor," Barton said. "They understand this has become a hot button for us. They realize we are moving toward a prepay model. They're open to talking to us now about how to get this done."

Barton suggested a three-pronged method to address the no-show problem: Give a discount to customers that put down a credit card at the time of the reservation to guarantee the reservation, with a one-day charge for a no-show; give a larger discount for prepaying the reservation with no changes allowed; or, with no credit card at the time of reservation, guarantee the customer a car, but make it subject to an upgrade or downgrade depending on fleet availability with no rate adjustment.

A Hertz representative from the audience said that the company is also rolling out a prepaid program and it has been successful. Hertz will further implement the program, he said. 

- Why does the industry need a strong ACRA? Sharon Faulkner is tracking 125 bills in 35 states that could impact the car rental industry-most of them negatively. "If you're asleep and not letting us at ACRA help you with these things, we're all going to get hurt," she said.

Frank Colonna of Triangle Rent A Car, who has successfully lobbied for the industry in his legislature, finished with one of the most compelling reasons for a strong association. A politician once told him, "When you all get your act in one bag, come see me."

"Politicians want to hear from an industry, not fragments within the industry," Colonna said.

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Author Bio

Chris Brown

Executive Editor

Chris is the executive editor of Business Fleet Magazine and Auto Rental News. He covers all aspects of the fleet world.

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