Sunday, May 14, 2006

Enterprise Tests Hourly Car Rental - But is it Carsharing?

Enterprise Rent A Car has been quietly making waves in several cities about carsharing. What their overall strategy is not yet clear but it's certainly an indication that they recognize that carsharing is finally a force in the marketplace to be reckoned with.

It's worth remembering that Enterprise pioneered the neighborhood car rental model, initially leaving the airport locations to the existing companies. It created the entire "insurance replacement" car rental market and is now the largest car rental company in the world. People in carsharing have been aware that Enterprise has been watching the industry closely. Presumably the recent growth of Zipcar and Flexcar have made them pay attention to the potential competition to their neighborhood car rental business.

Here's what's been happening:

In Portland Oregon, in what appears to the be second instance of Enterprise offering hourly car rental, they're now promoting it in a low key manner, possibly related to that city's consideration of a new on-street parking policy for carsharing described in another post here. The Enterprise flyer list their rates "Starting from $8.50 per hour" for up to full size cars, and in an obvious reference to carsharing, the flyer has banner stating "No Membership Fee Required".

According to the fine print, the 12.5% country rental car tax is applied on top of the quoted rate - bringing the actual fee to $9.56/per hour, higher than Flexcar's base rate of $9/hour, which includes gas and insurance. The rates apply to reservations made 2 hours in advance and only include their standard rental car insurance coverage. Additional damage waiver is available for $7.50 for 4 hours or less or $14.99 per day. Even for a one hour trip drivers do have to go to the office and fill out the normal set of car rental paperwork and return the gas tank full.

Upgrades to SUVs, Cadillacs etc. are available for only "$4 more" (which turns out to be $4 per day.) The Portland flyer offers customers the company's signature service, "we'll pick you up, free".

While I doubt this will have much affect on Flexcar's membership, it certainly provides their customers with a potentially attractive, if cumbersome, option for some types of car rental trips.

The first instance of Enterprise offering hourly rates that I'm aware of was as part of their special deal with Stanford University that includes rentals to 18-20 year olds. Rates start at $14/hour for these drivers. Stanford chose Enterprise over City Carshare for their on-campus deal. If you're curious, you can read about the Stanford program, including a download a PDF of the Enterprise rate sheet here).

(And for what it's worth, in the late 1990s, Vista rental car, operating in Florida and Arizona, also offered hourly car rental for a while. Over the years scattered car rental companies have offered half day rates at various times.)

Enterprise has been busy in other parts of the country as well.

In Chicago, Enterprise got involved in a legislative snit between I-Go and Zipcar about having to pay sales and rental car taxes - totally 12%. Perhaps sensing an opportunity to save their customers some money Enterprise claimed to be just like carsharing and therefore exempt from the tax as well. A newspaper account described Enterprise as being "the most vocal in a campaign against rising taxes used to fund municipal projects such as sports stadiums."

Illinois House Majority Leader Barbara Flynn Currie was quoted as saying, "We're trying to find out why they [Enterprise] think their business model has the same effect that they think the car-sharing model has. I can't see it." She hopes to resolve the issue later in this session. A good summary of the issue was reported by the Chicago Sun Times here.

Dr. Susan Shaheen, at UC Berkeley and carsharing guru to the world, was even moved to write a letter to the newspaper explaining the differences she saw between car rental and carsharing. She said, " I find the scenario unfolding in Springfield a bit perplexing: Car-sharing and car rental are not the same and do not have the same effects on travel behavior." She quoted numerous statistics about the benefits of carsharing and said that Enterprise has provided no data to show similar benefits from car rental. The letter can be read in its entirety in the first Comment below.

In California, a bill was introduced in the California legislature in February to ammend the California Vehicle Code to explicitly grant cities the right to designate on-street parking for carsharing. Assembly Bill 2154, introduced by Assembly member Jackie Goldberg by request of the City of Los Angeles. I'm told it was opposed by Enterprise but is still moving through committee. Background on the legislation can be found in this City of Los Angeles PDF memo.

So, with success comes competition and the carsharing plot thickens.