Hertz cuts price of one-way rentals

October 15, 1992|By New York Times News Service

The Hertz Corp. said yesterday that it would sharply cut the cost of one-way car rentals for non-business travelers in an attempt to stimulate new trips and attract customers from other rental car companies, the airlines, bus companies and Amtrak.

Hertz said that it would immediately eliminate its "drop charges" on intermediate and large cars nationwide in the 800 Hertz locations it owns and that it planned to do the same next month at 700 franchise locations.

But its new "one-way rates," charged by the day, will be higher than the daily rate for a car rented and returned in the same city.

For example, a driver in Washington who wants to go to Atlanta and does not qualify for any corporate discounts will be able to rent a midsize car, like a Ford Tempo, for $90 a day, or $270 for three days.

The old rate was $43 a day plus a drop charge of $800, for a total of $929. The rate to rent a car in Washington and to return it there three days later is $43 a day. The prices do not include gasoline, taxes and optional insurance.

Hertz and other rental companies have already eliminated their drop charges between many cities, especially in Florida and California. Before yesterday's announcement, Avis was already offering cheaper rates on many one-way trips. But Hertz believes that it can handle one-way traffic at lower costs than its competitors because it has the biggest network of corporate-owned locations.

"The biggest cost, and the reason for drop charges, is that the car goes away from where the owner is, and he has to get that car back, one way or another," said Brian J. Kennedy, Hertz's executive vice president for marketing and sales. "You can't always rent it going back; many times, somebody has to go get it."

But if Hertz owns the rental location in Washington and the one in Atlanta, Mr. Kennedy said, then "as long as the car's being used and rented, we don't care where it is."

Hertz acknowledged that on some routes its new policy merely brought it into line with competitors, rather than establish a lower price for cost-conscious shoppers. But many of the lowest-priced companies do business in far fewer locations.

Competitors disputed the significance of Hertz's announcement. At Avis, Russell L. James, a spokesman, said the announcement amounted to repackaging. "What they have announced is that they are no longer charging for dessert," he said. "You can buy the entree with dessert now." If necessary to stay competitive, he said, "We will repackage everywhere, too."

Mr. James acknowledged that eliminating drop charges was easier if the car was traveling between two company-owned locations.

Hertz, based in Park Ridge, N.J., said that under its current pricing system, there are extra charges for about 10 percent of its leisure rentals because of where the car was dropped.

Other companies said, however, that Hertz's drop charges were particularly steep. For example, in contrast to Hertz's $800 fee between Washington and Atlanta, Dollar's highest fee is $500, for transcontinental rentals.

But the number of renters who actually pay Dollar a drop charge is similarly small, about 9 percent. And a driver who appeared at the Dollar rental counter in Boston or Washington and asked to rent a car to drop in the other city would be turned away.

The new move on one-way rentals comes as the car rental industry ends a record-breaking summer.

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