How to Make Money in the Car Rental Business

How long has it been since you’ve taken a good look at your business? Is it everything you want it to be? Do you have clear goals? Are you working toward those goals, or have you lost your focus in the day-to-day grind?

Ask yourself questions like these, and stay involved in every aspect of your business. Be obsessed with the numbers. Stay focused on what you want your business to be, yet be flexible. Know how well your employees are performing. How well you do these things is directly proportionate to how much money you’ll make. That was the message from Neil Abrams, president of Abrams Consulting Group Inc. in Purchase, N.Y., during his seminar at the 2002 Car Rental Show, “Can Anyone Make Real Money in the Car Rental Business? Yes, You Can, Here’s How…”

“There are great challenges and great opportunities in this industry,” said Abrams. “I’m here to tell you that you can make money in this business even in this economy.”

Abrams offered several moneymaking ideas to a packed room at the Las Vegas Convention Center in October, including:

1. Challenge your business model. Take the time to look at your vehicles, customers, market, rates, technology, the people operating your business, and think about all the possibilities.

“You must evolve with the changing landscape of the marketplace,” said Abrams.

Ask yourself some questions: Does my business model work today? Has it become stagnant? Has my market position eroded? Do I want to build the asset value of the company, then get out? Have a plan and constantly challenge it.

“I know you all work hard and you think you challenge your business. But are you challenging it enough?” asked Abrams.

2. Be obsessed with numbers. “Those companies that are obsessed with numbers have the best shot at success,” said Abrams. Take the time to look at every possible benchmark, including, but certainly not limited to, revenue per user, utilization, average length of rental, reservation build and earnings. Scrutinize your P & Ls. Know what you did this time last month, this time last year, this time three years ago.

3. Know your fleet and your customers. Don’t let the deals drive your decision. Instead, let your customers dictate your fleet. Will your customers be happy with a used car that’s in good shape and has 30,000 to 40,000 miles? Try it out.

What will customers pay? Test a rate class and see. “I’ve got a client that rents PT Cruisers for $70, $80 and $90 a day. The customer perception is that this is an expensive car, a fun car,” said Abrams.

Keep your fleet costs in check or the business will fail. It’s your greatest opportunity to make money and your greatest risk.

Also, have a 12-month fleet plan that is constantly moving out 12 months. Change it to meet the demands of the constantly evolving rental market, travel industry, economic climate and the aftermarket.

4. When acquiring a vehicle, know when, where and how you’re going to dispose of it. If the aftermarket wants bells and whistles and a pretty color, get them. Whatever it is, have a disposal plan.

5. Manage risk. Dedicated people in the risk area will pay for themselves many, many times over. How much time do you spend on subrogation? Do you let your insurance company worry about it? Do you follow up on it? “In theory, good money can be made buying and selling vehicles,” said Abrams. “Then, it can leak out through not pursuing claims.”

6. Don’t neglect sales and marketing. Without sales and marketing, you’re just another rental company. Define what makes your business unique. That’s what you’re merchandising, and you’ve got to make your customers aware of that distinction. Your business’ unique characteristics provide opportunities to draw the customer to you and pay more.

7. Look for marketing alliances. If you’ve got a large hotel next door, propose a deal. Refer customers to the hotel, and have them refer business to you. Put a brochure together that talks about your alliance with the hotel, or put a phone in the hotel that dials your location. Be the rental car agency for the local convention center.

8. Optimize your profitability. How much will your business be worth when you’re ready to cash out? At the end of the day, you’re selling the value of the brand. There is intrinsic value in an established brand with real customers and real revenue. There’s always someone who will see value in your business that you don’t see.

9. Fight for the lowest fleet finance interest rate. Every 1% you save has an enormous impact on your bottom line. Use your sources, friends and colleagues to find it. Meet as many lenders as possible. Once you get that 1%, start looking for the next one.

10. Manage revenue and adjust real-time prices based on your utilization. Companies that do this with passion can squeeze up to an extra 15% to the top line. Look at your availability and your competition’s availability. “I had one client who called his competition and found out they were out of cars for the weekend. He increased his prices by 25%,” said Abrams.

11. Identify your great employees and pay them well. They will pay for themselves many times over. The value of an exceptional employee is so critical to making money in this business. According to Abrams Travel Data Services, the average pay for rental agents is $8 to $9 per hour. Remember, these individuals are renting $20,000 -plus vehicles to strangers.

12. Provide full disclosure to your customers. The customer should acknowledge anything special or unique about your rental agreement. Penalties must be clear to the customer. At the end of the day, it’s your word against the customer’s.

Above all, Abrams said, continue to challenge yourself and challenge your business model. Business is fluid — your operations must be as well.

Comments

  1. Muhammad Tahir Gaba [ April 25, 2013 @ 02:16PM ]

    Axelant pl, keep me informed for more info

  2. deecee [ May 12, 2013 @ 06:58PM ]

    there is a car rental biz in Brooklyn and NYC Urentauto.com they have such cheap prices and brand new cars cheaper than the big competition how can a new guy on the block afford to rent cars so cheap?

  3. Temeno [ July 16, 2013 @ 01:03AM ]

    I came across this website travelauto.com, and found to be interesting review portal, which was listing all ranges of companies and allowing me to get in touch with the car rental service provider. Good thing is I was able to get better deal and good service. Probably I think it's when you deal directly with the company you will get better prices.

  4. Daniel Ndofor [ July 18, 2013 @ 09:12PM ]

    The comments are helpful.

  5. Vinny [ July 29, 2013 @ 10:45PM ]

    Do you have to legally have a location to own a rental car business?
    Can I use 'Pay as you go' insurance as my main rental car insurance?

  6. Ricky W [ August 11, 2013 @ 12:08AM ]

    Seeking investors for start-up rental car business in Palm Springs,CA. Really need vehicles and working capital. Business formation is already establish with business license and LLC business structure. Contact info: [email protected]

  7. Joe. Mccluskey [ September 1, 2013 @ 04:31AM ]

    Trying. To. Start. Business. In. Ireland. Insurance. Is. Problem. Difficult. To. Get. So. I'll. keep. Trying. Joe. Ireland

  8. Alex [ October 15, 2013 @ 06:18AM ]

    Great article! I'm working in a rent a car company in Bulgaria. Is there any statistical information about car hire expectations and revenue in Europe?

  9. rehvivahetus [ November 22, 2013 @ 01:55AM ]

    Is there anything suspicious, when You find a car rental that is noticably more cheap than others. Does it mean, that I also have to loosen up little bit in qualitywise as well?

  10. majid [ November 22, 2013 @ 03:48PM ]

    GREAT ARTICLE, coming soon in Marrakech Morocco, carisma car, i willdo my best to succede.

  11. Deepak singh [ January 7, 2014 @ 08:57AM ]

    nice one absolutely amazing

  12. james kumutari [ January 10, 2014 @ 11:49AM ]

    great article, have learn't alot.

  13. Ricky W [ January 11, 2014 @ 02:18PM ]

    Seeking partner/investor to purchase Lamborghini and Ferrari. Company already establish in Palm Desert/ Palm Springs California. Need partner or investor that understands risks and high rewards. I have clients from UK, Canada and Hollywood celebrities. Contact info: [email protected] or [email protected]

  14. George James [ January 17, 2014 @ 09:01AM ]

    This was a great article. At Upscale Luxury Car Rentals Houston http://www.upscalecarrentals.com, we started to implement some of the things mentioned above.

  15. A MAJEED [ January 25, 2014 @ 11:30AM ]

    i got chance to work in a rent a car. so pls let me know how to work and how to market

    thanks

  16. Prashant Kalhapure [ April 14, 2014 @ 11:43AM ]

    Really a nice guidance. Thanks

  17. Tarek Salem [ May 1, 2014 @ 09:03AM ]

    Thanks for these valuable information. What the best way to make monthly inventory in a rent car company with a huge fleet and many rental locations?

  18. Wilhelmina Pheto [ May 15, 2014 @ 12:07AM ]

    good article and guidance for new beginners like me, regards.

  19. sallu zahid bakshi [ June 7, 2014 @ 03:54AM ]

    great.......... ideas , an idea can change your life

  20. hawa mohammed [ July 23, 2014 @ 03:54AM ]

    good advice....would like more of this because have just started this business.

  21. Elijah Nanse Deilala [ August 3, 2014 @ 05:15PM ]

    It's a very interesting information...I also run a hire car business in Papua New Guinea,it's an island nation north of Australia. My currently is rapidly developing with such big project like LNG and the opportunity of hire cars is in demand. Thank you for those infor and it would great to have some of those cars in my country, it will sure make some good amount of money cause we don't have them here. Especially the GMC van.

  22. Elijah Nanse Deilala [ August 3, 2014 @ 05:16PM ]

    It's a very interesting information...I also run a hire car business in Papua New Guinea,it's an island nation north of Australia. My currently is rapidly developing with such big project like LNG and the opportunity of hire cars is in demand. Thank you for those infor and it would great to have some of those cars in my country, it will sure make some good amount of money cause we don't have them here. Especially the GMC van.

  23. Paul [ August 10, 2014 @ 01:05AM ]

    This article by far Is the best article I've ever read however! "Rule #11. Identify your great employees and pay them well" This will never happen EVER!!! And the ones who are making good money are so high up In the company you almost have to be next In line to owning the business. Do you think any of the top "so called" best of the best rental companies give a rats ass upon the people they hire and make them money? lol NOPE!!!!! Ever read former employee reviews on google? LMFAO!!!! There's a big reason why so many people don't last long working In the rental Industry, Personally I don't blame them. I've been working In the car rental Industry for 12 years and even tho I was making minimum wage, The owner always took care of me with perks I wouldn't ever receive from other rental employers. Unfortunately In January of 2014 the company closed down and I lost my job, I'm still unemployed and the top rental companies won't even give me the time or day. Why? Because they assume they will have to pay me more because of my years of experience In the field. Yet these companies make millions of dollars ever year, What a joke!

  24. Scott [ August 24, 2014 @ 02:10AM ]

    It really is teeming with scammers on the internet, really not normal. In one week I lost 500usd for payments. I had inquiries made ??at Dandy Cash.com
    came just disappointed. I would recommend anyone to advertise on the site.I've only tried it a different website, and when I had finally found someone
    who was still honest ([email protected]) Because he asked me in advance, but doubted he could give evidence and so I took the risk anyway
    and I was able to borrow from him. 30000usd,please dont email anybody said to be a loan lender in this website because they are all scams,they
    disappoint me and run away with my 500usd,Mr scott utah is the only one i trust because he gave me the loan i needed,,please do not email anyone in
    this website because they are scams they pretend to be loan lenders they rip people of their hard earned money the USA Attorney General Of Police are
    searching for this guys in the internet right now so dont email this guys please they will rip you off like they did to me..

  25. scott [ September 1, 2014 @ 03:07PM ]

    Don't neglect inventory management and scheduling either!

  26. Ali [ November 4, 2014 @ 10:25AM ]

    Very much informative... Please keep me informed further about this business.

  27. Sasha Sarajevo [ November 10, 2014 @ 03:47AM ]

    Respect to all!!

    I saw this article and I hope that someone can help me. I am marketing manager and rental agent in my company in Sarajevo. We are really good company with great fleet and we are loking forward to expand our business. I would like to ask all af you, if you can show me the way to contact some brokers that I can become supplier from Bosnia and Herzegovina. Belive, or not, there is a big number of tourists worldwide who comes to Bosnia, and they need a car for trips etc. Is there a marketing agency that can put me in with that big brokers as cartrawler.com, arguscarhire.com, autoeurope.com etc. I used to send a millions of emails, but never get a respond.

  28. Sasha Sarajevo [ November 10, 2014 @ 03:50AM ]

    If someone can give me some details, I would appriciate if it send on [email protected]

    www.gdmarketing.ba

  29. chris [ November 28, 2014 @ 02:10PM ]


    I’m Mr Chris Lovett by name. I live in USA, i want to use this medium to alert all loan seekers to be very careful because there are scams everywhere.Few months ago I was

    financially strained, and due to my desperation I was scammed by several online lenders. I had almost lost hope until a friend of mine referred me to a very reliable lender

    called Mr Scott Utah who lend me a loan of $10,000 under 8hours without any stress. If you are in need of any kind of loan just contact him via

    email......[email protected] i am using this medium to alert all loan seekers because of the hell I passed through in the hands of those fraudulent lenders. And I don’t

    wish even my enemy to pass through such hell that I passed through in the hands of those fraudulent online lenders,i will also want you to help me pass this information to

    others who are also in need of a loan once you have also receive your loan from Mr Scott Utah,i pray that God should give him long life. God bless him forever for the good

    things he has done in my life.

  30. shawn [ November 30, 2014 @ 12:15PM ]

    Hey guys, my name is shawn and I am from toronto, canad. I am really interested in starting a rental agency. I know id have to start off small but the things im stuck on is if I were to lease a car for 12 months what kind of insurance would I need. Would I have to cover the cars or offer clients insurance packages? I am confused at how the fleet insurance works! Please help!

Comment On This Story

Name:  
Email:  
Comment: (Max. 10000 characters)  
Please leave blank:
* Please note that every comment is moderated.

 
 
 
 
 

Newsletter: Sign up to receive latest news, articles, and much more.

Read the latest

Auto Focus Blog: A blog covering fleets, auto rental and the business of cars

5 Predictions for Car Rental in 2015

Next year’s mechanics hinge on plentiful new car supply and a softening used car market.

Premieres and Trends at the LA Auto Show

The 2014 Los Angeles Auto Show featured less green-speak and more driving excitement aimed at younger buyers. Get ready for more compact crossovers, as Mazda, Honda, Fiat, Volkswagen and Scion launch brand-new models next year.

Hertz’s Earnings News: Rapid Reaction

Hertz will be on an accelerated buying and selling schedule in the next six months. How might that affect the market?

Job Finder: Access Top Talent. Fill Key Positions.