As we proceed into the next year, we face a lot of open questions. The threat of war and terrorist attacks stare us in the face; the economy continues in the doldrums; the travel industry, especially car rental, continues to be plagued by all the negatives that surround us.
Many rental car firms have disappeared, and the shakeout will continue until credit lines ease up, the insurance climate improves and the car resale market recovers so holding costs become more palatable. Despite the negatives, there is a silver lining. We are certainly at, or near, the bottom of the economic cycle.”
This was written by ACTIF President James Shapiro in 2003. As Yogi Berra would put it, “It’s déjà-vu all over again.”
But are we at or near the bottom? Though there are signs to the positive, it’s hard to know. This prompted me to dig back in the Auto Rental News archives. I wanted to understand the then-current realities, the cycles and the predictions to see what, if anything can be gained from them.
From ARN’s inaugural issue, January/February 1988: “The U.S. customer has been spoiled by low prices. While the price of an average new car passed the $10,000 mark a while back, you can still get a rental car for under $40 a day in most cities.”
In 1997, the daily average rate was $42. In 2008 it was just over $40, when the average price of a new car was $28,000.
From the October 1989 issue: “Presently, there is a great deal of over capacity in the automobile industry, and this trend is expected to continue for the next few years.”
In a profile from June/July 1993, Dollar’s Gary Paxton had the moxie to call for guaranteed reservations.
In a June 1994 article, one funder proclaimed, “More attention must be paid to retained earnings in the company, now. Companies have to develop healthier equity distribution to get funding.”
Rate increases, right-sizing of fleets, guaranteed reservations and better debt-to-equity ratios: Does it feel like we’re banging our heads against the wall and it’s nothing but headaches?