This year’s annual American Car Rental Association legislative conference will be one for the historical memory books.
As industry leaders and executives convened for sessions in the U.S Capitol Visitors Center Oct. 24 and then held lobbying visits to House and Senate office buildings the next day, a first-ever Speaker of the House serial drama was unfolding in the U.S. House of Representatives chamber nearby. Stirring the pot further was a morning protest near the Senate office buildings on the morning of Oct. 25, which prompted security to re-route visitor entry points.
But a few hours later, the underlying distraction and tension finally gave way to general relief with the election of Rep. Mike Johnson, R-Louisiana, to the Speakership — the fourth candidate since the ouster of Speaker Kevin McCarthy Oct. 3 — as ACRA conference attendees were circulating to a total of 55 House and Senate offices.
A fully functioning legislative branch could now be an encouraging indicator for the four key proposals that ACRA is advocating on behalf of auto rental companies and operators nationwide.
During the legislative conference and event Oct. 23-25 organized by ACRA executive director Sharon Faulkner and ACRA lobbyist Greg Scott, about 80 attendees participated in educational sessions and lobbying workshop panels that emphasized four front-burner issues:
- Rules and laws that affirm the right of vehicle owners to possess, govern, and direct the distribution of data generated by rental vehicles.
- Restoration of full 100% tax expensing for rental vehicle purchases.
- Federal funding to build more charging infrastructure at airports and rental car facilities for electric vehicles.
- Measures to combat rampant catalytic converter theft.
A total of 60 attendees armed with talking points and issue insights divided into eight teams of 4-6 participants each, with four teams visiting House of Representative offices for four key U.S. regions; and four teams visiting Senatorial offices for the same regions. In a practical bi-partisan strategy, the ACRA attendees engaged with a roughly equal number of Democratic and Republican legislators and/or their Congressional aides.
ACRA On the Front Lines
At an event introduction Oct. 23, ACRA President Sharky Laguana, owner of Bandago in San Francisco, called the D.C. event a valuable opportunity to “advocate for the industry in the bowels of government.”
“What we try to do is make you smarter,” Laguana told the conference participants. “We’re doing government training and trying to show you how to advocate for yourself effectively in government. This makes us smarter about the industry and lobbying our government.”
Referring to the timing of the ACRA conference, he added, “We’ll be there at a potentially historic moment for leadership in the nation’s capital. It’s fun-ish.”
Scott homed in on the political stakes for the national auto rental industry, framing the challenges ahead: Congressional committees will be considering vehicle data access rules, while legislators need to remedy the gradual dissolution of the vehicle expensing provisions that are declining 20% a year until 2027 when the crucial deduction disappears. “We do not want the sunsetting this year of expensing,” he said.
On the vehicle data issue, Scott posed key questions to car rental operators and executives, many of whom will be adding data-heavy electric vehicles into their fleets: “Who owns that data? Who controls the data? Do you have to pay for the data to analyze it and manage your fleet? . . . We should control that data. We shouldn’t have to go to OEMs to buy that data or go to anyone at all.”
Regarding the two other issues, Scott advised conferees that ACRA is pushing for the federal government to increase funding for EV chargers at airport consolidated rental car centers (CONRAC) to assist auto rental companies with the transition to electric fleets. And on the topic of catalytic converter theft, Scott said, “There is not an operator in this room that has not had a catalytic converter stolen from a vehicle.”
PACed Political Event Draws Big Hill Names
The evening before the Oct. 25 lobbying day, ACRA held its annual ACRAPAC Congressional Reception at a Capitol Hill restaurant that raised $3,200 from individual contributors, boosting total monies raised this year-to-date to $35,200. In all of 2022, the ACRA PAC raised $28,600.
Legislators appearing at the event and making brief remarks included Sen. Kyrsten Sinema, I-Arizona, who serves on the Senate Committee on Commerce, Science, and Transportation; Sen. Jacky Rosen, D-Nevada, who serves on the Senate Committee on Commerce, Science, and Transportation and the Senate Committee on Small Business and Entrepreneurship, and chairs the Subcommittee on Tourism, Trade, and Export Promotion; and Sen. Catherine Cortez Masto, who serves on the Senate Committee on Finance and the Committee on Energy and Natural Resources.
Also appearing was Rep. Sam Graves, R-Missouri, who authored the federal Graves Amendment, passed in 2005, that protects car rental and leasing companies from being held financially responsible for injuries caused by their customers unless it can be proven that the company's own negligence or actions contributed to those injuries.
At the Oct. 23 introductory conference session, Faulkner cited the Graves Amendment as a reason why industry businesspeople should support the association and its legislative efforts.
“Sam Graves saved the car rental industry,” Faulkner said. “Without Sam Graves, I wouldn’t have been in business close to 40 years. That was the biggest [legislative] coup I’ve experienced with the car rental industry.”
THE FOUR MAIN ISSUES:
During the first two days of the conference, attendees delved into the four key advocacy topics in the run-up to lobbying day:
NO. 1: Vehicle Data Access Involves Many Nuances
ACRA belongs to a coalition of organizations that form the American Alliance for Vehicle Owners’ Rights (AAVOR) that calls for vehicle owners to be able to secure and access their own data.
The explosion of data generated and gathered within increasingly digitized and connected vehicles requires a clear legal framework to handle and use it. Many vehicles are transitioning to wireless access that bypasses the in-cabin, wired-access port, according to AAVOR, while embedded technologies are restricting vehicle owners’ access to the data their vehicles generate.
AAVOR, which supports Congress taking the lead in guaranteeing vehicle owners and lessees access to and control of all data, believes the benefits of applying vehicle data to find more efficiencies and insights will only be realized if vehicle owners:
- Retain the ability to securely access and control the data their vehicles (and equipment attached to their vehicles) generate, collect and store;
- Without artificial barriers that reduce consumer choice or competition;
- In real-time through secure, technology-neutral, standards based, in-vehicle access;
- And without obtaining consent from an entity that does not own or lease the vehicle.
It supports a bi-partisan, bi-cameral set of consistent, universal standards to govern the vehicle data.
During an ACRA panel discussion Oct. 24 — “Vehicle Data Access: Consensus or Divergence?” — attendees heard panelist experts make the following points:
- Vehicles are more like computers on wheels with an increasing number of data users. An entire market and industry has arisen for data that vehicles generate.
- Vehicle owners should be able to use and delegate it out to partners who they do businesses with.
- Just as any owner of a smartphone also owns the data, a vehicle is no different.
- How should vehicle generated data leave a vehicle and make its way to use cases for customers?
- A vehicle owner controls the vehicle data. You control access for your own consumption, and a customer can access that data via agreement.
- The challenges for ACRA is to deal with the incosistency in the data delivered from different makes/models bought in a given year. OEM data standards so far are not consistent.
- All market players should have equal access to data generated by vehicles. Cyber security sits at the heart of it.
- A solution needs to be based on accepted industry strandards that are tech neutral, and a tech standards interface at the vehicle level or in the OEM cloud. Cyber security must be part of it.
- You buy a phone and own the data but you still have to pay for the service. Data needs to be bi-directional.
- It likely will take five to seven years to develop and get everyone aligned onto the pathways and principles of data access.
- Definitions and standards matter. Create standards that every tech provider and OEM in market can rely to build physical solutions. It would be impossible to dictate to OEMs what features to put in their vehicles, but they can abide by tech-neutral standards.
NO. 2: Full Expensing of Rental Cars and Personal Property
The 2017 Tax Cuts and Jobs Act (TCJA) authorized 100% expensing of vehicles, equipment, and other business personal property through 2022, according to an ACRA policy paper. Starting this year, the deduction phases out at a rate of 20% year, fully expiring in 2027.
“The auto rental industry has taken advantage of such “full expensing” of their rental vehicles to survive the business downturn the car rental industry experienced during the COVID pandemic and continue to use full expensing to rebuild their rental fleets as travel and rental vehicle demand returns post-pandemic,” the paper states.
As a point of fact, the car rental industry bought one out of every eight vehicles in the U.S. in 2019, compared to one out of every 10 in 2022. That purchasing power demonstrates how the car rental industry forms a crucial support for the U.S. economy and the vehicle manufacturing industry. High inflation, rising interest rates, and supply chain issues continue to drive up the cost of replacement vehicles that circulate out of rental fleets at comparatively lower mileage points and shorter timelines.
As a result, ACRA advocates delaying the phase-out of full expensing at least through 2025 as a short-term legislative action that can be accommodated within federal budget constraints, but long-term wants to make permanent the full expensing of personal property, including rental vehicles.
A panel discussion, “Politics and Policy – Full Expensing,” underscored the facts and consequences surrounding the issue:
- At a community level, the politics of this issue is non-partisan, since business certainty leads to higher wages and investment and propels the economic engines of local areas.
- Rental car operators need to explain the value proposition of their businesses, and how full expensing belongs in the tool box to drive economic health and growth.
- China calibrates its economic policies in ways to make its business environment more attractive than the one in the U.S., which must remain competitive in every business sector.
- The tax expensing should be talked about more often and be part of any legislative negotiations to change the tax code.
- With the ongoing transition to more costly electric vehicles, full expensing become even more vital to fleet affordability. Without it, fleets may avoid the higher expenses of EVs.
- The full expensing makes it easier to reinvest savings and profit gains, hire more workers, increase wages, buy more vehicles, meet more consumer travel demand, and contribute to the lifeblood of the economy.
NO. 3: Electric Vehicle Infrastructure for Car Rental Facilities
With rental car providers moving toward greater fleet electrification, the most effective way to build confidence is to supply plenty of simple, easy EV charging access. For many Americans, a rental car will be their first attempt at trying out and testing how well an EV works for them.
Out of all the fleets in transportation, the rental car sector serves as a key portal to widespread consumer acceptance of EVs. 25% of all light duty vehicle miles travelled in the U.S. each year are in a rented vehicle, while 50% of all rental vehicles start their trips at federally funded or assisted airports and the other half in neighborhoods.
With multiple federal funding programs available, car rental companies will need to access the money to defray the high costs of extending power sources and installing charging infrastructure.
“Such a program could include installing charging infrastructure at consolidated airport car rental facilities (so-called “CONRACs”) at publicly owned airports, as well charging infrastructure at the thousands of “local” car rental facilities in urban and underserved areas – locations that tend to be some distance from the existing charging network focused on the interstate highway system,” according to an ACRA policy paper.
EV power needs and timelines should be based on anticipated rental car volume across multiple timelines, as well as the ratio of Level 2 and Level 3 chargers. That charging infrastructure must be standardized and permitted in a streamlined manner. The combination of utility power supply, electricity rates, and grid reliability must be able to sustain fast customer turnaround times for rented vehicles.
“The nation and world are moving toward electric vehicles,” Laguana said. “They’re coming faster with massive amounts of money behind them. They are the biggest change in the industry since the switch from horses and buggies. The industry has never faced this type of change and we are at a critical moment.”
During a session, “Diverse EV Perspectives and Policy Priorities,” experts outlined the core components and approaches to developing charging infrastructure:
- Two types of charging are needed to accommodate rental vehicle customers: Readily available public charging along commonly traveled routes and destination charging at common tourism, travel, convention, and recreational locations.
- Rental car companies need infrastructure built into facilities and operations to turn around EVs as needed, requiring extensive coordination.
- Rental operators should develop a charging strategy before buying EVs, since large service upgrades may take 18-24 months. That presents a significant time gap between buying vehicles and developing the charging infrastructure.
- Questions to ask: What do EVs mean for you and your business? What investments should you make and when? What does consumer demand look like?
- Federal governments and airports are primarily responsible for resolving challenges and problems. They must see the motive for new substations and transformers.
- Rental car companies do not operate on precise or predictable duty cycles like those of other fleets. Rental fleet activity varies based on peak travel seasons, which are not as fixed as the routing plans of service fleets.
- If everyone relies on Level 3 chargers to turn around rental vehicles, how can they run enough power to supply those vehicles?
NO. 4: How To Prevent Thefts of Catalytic Converters
Rental car companies are suffering heightened loss-of-use of their rental vehicles due to thefts of catalytic converters, which diminishes customer revenue. The National Insurance Crime Bureau estimates thefts increased by 1,215% between 2019 and 2022, ACRA reports, as the owners collectively of more than 2.1 million vehicles in 2022, almost every ACRA member has had multiple catalytic converters stolen.
Thieves steal catalytic converters to sell valuable metals such as rhodium, platinum, and palladium on the black market. Rhodium, for example, was peaking at almost $30,000 an ounce in May 2021, and a stolen converter can net $350 on the illegal market, according to an ACRA policy paper. Because law enforcement cannot trace the easily dismantled parts, they are impossible to recover.
In addition to unusable vehicles, rental car operators face high costs to replace and install catalytic converters due to high demand and lingering supply chain constraints. Replacing the converter alone can cost $2,500 per vehicle plus the costs to fix or replace other parts damaged during the theft.
To deter thefts and recover more converters, ACRA supports the “Preventing Auto Recycling Theft” (PART) Act (H.R. 621/S. 154), a bill to combat the growing national problem of catalytic converter theft. The bills provide a national framework to boost law enforcement and would require catalytic converter transactions be recorded and made accessible to law enforcement officials to catch criminals in the chain of black-market activity. The bills would also require I.D. numbers on converters to make them easier to trace.
- During a related safety panel discussion Oct. 24, ACRA leaders said the proposed legislation is a no-brainer that should draw strong bi-partisan support. The only possible opposition mentioned could come from auto manufacturers concerned about the logistics and costs of catalytic converter stamping while vehicles are being assembled.
In summing up the legislative and regulatory mission of ACRA, Laguana told attendees.
“The tools you learn here also work well at the local level. This is a constructive pursuit we can do for our membership. It’s not only a good thing to do, but it’s in our collective strategic interest. We want everyone to be smart.”