Don't Buy--Rent

Into the booming auto rental business last week drove a husky newcomer. Greyhound Corp., the biggest U.S. bus line, is forming a car and truck renting subsidiary to be called Greyhound Rent-A-Car, Inc. Concentrating at first on long-term leasing of car and truck fleets to business firms, it will move into hourly and daily rentals to individuals early this summer. The twelve-month goal of Greyhound's new president, ex-Railroader Arthur S. Genet (TIME, Nov. 14), is a fleet of 10,-ooo cars and trucks, third largest in the rental business.

Still far in front of the field is Hertz Corp., with a fleet of some 33,000 company-owned or franchised vehicles operating out of 717 cities in 22 countries. Hertz's leading competitor is Avis Rent-A-Car System, with roughly 15,000 cars and trucks. But business is so good that neither is worried by Greyhound's entry into the field. Says Avis' President Richard S. Robie: "We've only scratched the surface of this business. The potential is tremendous. The only competition we have is from the man who drives his own car or truck."

Model T to Diners' Club. That competition has been steadily weakening ever since a Chicago auto salesman named Walter L. Jacobs started his car rental business with twelve model T Fords in 1918. He built the fleet to 565 cars in five years, then sold out to Taxicab Manufacturer John Hertz. Jacobs stayed on in the company, eventually rising to president, and has convinced millions of travelers that it makes sense to rent a car.

Tourists and traveling salesmen, for example, found that it was easier to cover the nation by rail and air, renting a car at each stop, than to drive all the way. Corporations discovered that by leasing fleets long-term they could free working capital, avoid maintenance worries, figure their transportation costs more accurately in advance.

To push the idea still further, the renters have invented a dozen new schemes. Hertz, which has 227 rental facilities at airports, recently made the same deal with 17 major U.S. and Canadian railroads. The company has also made an agreement with the Diners' Club to charge car rentals. And to accommodate overseas travelers, Hertz last week set up an international division that will handle reservations, obtain international drivers' permits and border-crossing documents for customers.

From Maps to Airplanes. Avis has developed some tricks of its own, such as its "Fly-Drive Plan" for air travelers. By paying an extra $10 when he buys an airline ticket, a traveler can pick up a car at his destination, use it for 24 hours, drive it 50 miles without further charge. Another Avis idea, to be launched soon, is to supply cars for tours to scenic and historic spots in the U.S. For a price ranging from $10 to $100, the tourist will get a car, maps and guides, and in some cases overnight lodging.

All this has sent the car rental business soaring. Hertz Corp. has bought ten smaller rental companies and an auto insurance firm in the last 15 months, hiked gross revenues 30% to $89 million last year. Avis is also expanding, signed on Canada's 1,000-car Tilden System and bought Australia's Eric McIllree system. It now has 876 stations, nearly treble the 1954 number, expects last year's sales of $35 million to go up 45% this year. The National Car Rental System, an association of independent dealers, in five years has multiplied membership ninefold over the original seven dealers.

Looking optimistically to the future, Hertz President Jacobs expects business to get better and better, has budgeted a record $29 million for new cars in 1956. Says he: "One day, when we have the time to get at it, we'll start renting airplanes."

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