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Rental car struggles

As your lawmakers get ready to tackle Nevada's budget crisis, think about this: Last year, $41 million came to the state from people renting cars. Of that $41 million, $7 million went to Clark County.With tourism down, the number of people that are visiting are being more frugal. That means tough times for the rental car industry and less money for our state budget.

David Blanchard says when he and his wife visit Las Vegas, they usually get a full-size car. He says the switch to a compact was only one way they saved a few dollars this trip. "The only thing we did was rent the car, we didn't take any of the extras - gas, insurance, or anything else."

They might research the price of gas and even bring their own GPS instead of renting one from a rental car company.Customers cutting out non-essential add-ons or even choosing to avoid renting a car altogether are trends Advantage Rental president Maria Romano says she's noticed lately. Romano adds this is the most challenging business climate she's seen in her almost three decades as president of her own rental car company.

In December, flights to McCarran were down 15 percent from the same time in 2007. That translated to a $5 million loss in just one month to the rental car companies at the airport.

The fierce competition for an ever-shrinking pool of customers caused companies to slash prices, prices that couldn't maintain a profit margin. "Renting cars at 10-dollars-a-day isn't going to cut it in this industry, you need to make at least $35-$40 a day," Romano said.

Nevada has the fifth highest tax rate on rental cars in the country. About 30 percent is added to the final bill, money that goes back to the state. So when this industry suffers, it's just one more blow to the state budget.

"I think it's going to take a lot of us at least a year before our bottom lines are healthy again," said Romano.

Car rental companies say with numbers down, they are holding onto their inventory for longer periods of time. That's another blow to the auto industry as they suffer from reduced fleet sales to those companies.


Jerry said...

As the car rental companies struggle, it becomes more and more important for consumers to search carefully and do a lot of rate and product comparison before choosing a rental car provider.