What I Wish I Knew 25 Years Ago
One car rental sage reaches into his past for words of wisdom and connects it to the present and future.
February 25, 2013
“What do you know now that you wish you knew 25 years ago?” Two weeks ago we created a poll with this question in our ongoing commemoration of the 25th anniversary of Auto Rental News. You can see a compendium of results in the Mar/Apr issue of the magazine.
Some responses came in after the deadline, but this one, from Ken Elder, is worth bringing to your attention.
If you have any tenure in the car rental industry then you know Ken, whose career in car rental scans more than five decades as a Thrifty licensee, association board member, industry award winner and dispenser of sage advice.
Ken makes the connection between then, now and the future as only he can. Here is his response, unfiltered:
“Chris – that’s a tough question for me because by 1987, I already knew all there was to know about car rental. We knew calculators were much better than adding machines, 800 numbers were so cool, automatic car washes were too expensive for small operators and Japanese manufacturers wouldn't cut deals with independents or small franchisees.
Buy real estate, only if it is cheap. Trust your licensor – he will always have your back (right?)
And most importantly, get involved with trade/training associations like ACRA (American Car Rental Association), where networking, making friends and hearing from expert speakers will provide the best education available, not to mention speaking with a common voice to government issues. We all owe a debt of gratitude to folks like Fred Mudgett and Michael LaPlaca — founding pioneer predecessors of the present ACRA.
Now flash ahead to 2013, and much has changed. Much of what I thought then, looks ‘tongue-in-cheek’ now, or only partially correct.
Now retired 12 years, I'm amazed at the advances in technology. No doubt it will continue to grow exponentially.
In the early 80s, probably less than 20% of the population had ever rented a car. Much of our growth can be attributed to reaching brand-new customers. Continuing future growth will depend on making car rental a larger part of the whole transportation system.
One of the major difficulties in car rental is that too many variables are beyond a small operator's control. There is not much one can do if a couple major catastrophes collapse the insurance market. What happens if interest rates go to 18%? Have you been there when a manufacturer didn't want to sell you new cars? And so on.
Keep in mind that someday you will want to retire, and don't forget, it is better to sell your business when things are going well.
Earlier, I suggested buying land only if it was cheap. Now, I would advise to pace your growth to enable you to buy quality real estate. Ask most any retired car dealer and they will tell you that ‘they made a decent living selling cars — but they retired on their real estate.’
In the late 60s/early 70s there were basically three players in car rental. Rates were very expensive — partially due to airports skimming 10% off the top line. The big three and the airports were cozy with the near monopoly. Rates and profits were high. This created unintended consequences of allowing Budget, Dollar-a-Day, Thrifty, Alamo and later Enterprise, etc. to slip in under the radar. The race for market share was on. Rates dropped, and (surprise, surprise) volume grew and grew. All the car manufacturers figured out they could balance their assembly lines’ production by selling to (or even subsidizing) car rental firms.
In order to negotiate the best fleet deals, and to minimize operating and fleet costs, mergers began making sense. So did buying back franchises. That consolidating movement has brought us full circle. Today, again the pendulum has swung back to the Big Three.
One thing that I believe remains a constant in running a rental car business is the importance of ACRA in keeping current on trends, programs and just plain networking with old friends and meeting new friends. If you are as lucky as me, when you get old, you will find some of your dearest friends are ones you met at an ACRA meeting.
Chris, may I suggest you ask the same question in 2038 for the 50th Anniversary?”
Ken, we can only hope Auto Rental News survives for as long as you’ve been in business. If it does, I hope that generation will learn something from us today.
Author: Chris Brown | Posted @ Monday, February 25, 2013 12:00 AM