- Date 30 Apr 2017
- Category Insurance Knowledge Base
For Your Knowledge
Some rental car agencies are now renting out hybrid cars. And you might think this is an exceptional thing for a car rental agency to do, but it also costs the auto rental agencies more to rent these types of cars for several reasons. The first reason is return on investment; Hybrid cars generally cost $ 15- $ 20,000 more than regular cars of the same type, style, and size. Plus, they are higher on maintenance, and there are more things to go wrong because on a hybrid car you have an electrical system, and extra components, as well as a regular motor. They are very complex vehicles, and they have to deal with Murphy's Law.
Some car rental agencies in the big cities offer all electric plug-ins as part of their rental car fleet. This is also quite challenging because someone that does not drive and all-electric car may not realize that it's easy to run the battery down, and not be able to plug it in somewhere. And not all the hotels have places to plug in. Therefore people get stranded, and they have to have the vehicle towed back to the rental agency. This causes an angry customers due to additional fees and charges on their credit card and a whole lot of hassle for the rental car agency.
There is a good chance that a customer may become upset, and not wish to frequent that particular car rental brand again. There are all sorts of problems with these things. Also, hybrid cars because they are so complex and have more systems have a greater chance for recall from the manufacturer. There is a new law in California, and has also been adopted in other states that car rental agencies are not allowed to rent cars which are under recall, until they have been repaired and upgraded.
This means that a car rental agency that has five or 10 hybrid cars might have them all out of service when there's a recall, all at the same time. That does not happen very often, but car rental agencies could change their mind about the whole good corporate citizen eco-friendly motif. So, you might ask why do rental car agencies even bother to do this? Some of it has to do with PR because it does make consumers feel happy to rent from a company which prides itself on being environmentally friendly.
But generally, it is a loser from a return on investment standpoint. At least it has been in the past. As more all-electric and hybrid cars enter into the marketplace, and more consumers have those types of cars at home, they will be more apt to rent them, then, the price will come down, and the return on investment may make sense in The future for auto rental agencies. Right now we are in a transition period, and every business decision along these lines, has to be carefully considered. Indeed I hope you will please think on it.