I know every sad angle of the rental car business and I think people should be educated about some of the games that go on behind the counter. This list is truly the tip of the iceberg; I left the company because I had some misgivings about corporate policies toward customers and employees, but needless to say I picked up a lot of information along the way.
I assure you every bit of this is accurate as of February when I left my post, minor details may have changed but I highly doubt it. There are three main categories of rentals: personal retail , corporate, and insurance, but on every single contract that goes out the agent manually types out how much you pay per day and he has authority to make it pretty much whatever he thinks you should pay.
A good branch manager trains his employees to adjust the price as needed to keep the lot sitting tight, that means making some way-too-cheap deals when there are too many cars around.
It also means someone walking in saying they need a car no matter the price, that customer might get charged twice what he would have paid just asking for a car. The branch manager or assistant manager will be just as likely—if not more so—to drop the daily rate in order to sell you his pricey insurance package.
Insurance customers pay a lot less and all insurance contracts have unlimited miles. The daily rates vary by geography. Insurance rates are negotiated for each region, but they are usually around half of daily retail rates. Tell the agent that your insurance company is State Farm, or Farmers, or someone big—the big insurance companies have the best rates rates will vary a few dollars from company to company.
This is the bare minimum insurance replacement cost, rates are generally higher in the East and Northeast, a touch lower in the Midwest, and a lot higher on the West coast. Prices for the weekends are especially flexible, entirely dependent on how many cars there are in the area. Any insurance company will do, adjustors are the top of the customer pyramid.
Anything less than 5 is the same as zero. Set the deal up on the phone and if you can get a ride in, do it. Such a deal had obvious attractions. Both National and Alamo were already well established at airports across the country, while we were still battling to obtain decent space at some major facilities. But our company had never done a deal anywhere near this size. I knew it might be unpopular with our executive team.
Some would question why we should acquire these rivals when we were already gaining ground on them. There would also be big operational and cultural differences. Big differences, no question. But the more we discussed the potential deal, the clearer it became that we should proceed.
All our independent directors were in favor of it. Over the next few months we did our due diligence and worked to win antitrust approval. Integrating an acquisition like this is a tough job. But in the process we also learned a lot about ourselves and changed our company in ways that have equipped us for faster growth on a global scale.
When the deal closed, in the summer of , we began what can best be described as a deliberate integration. It was far more important to do it right than to do it quickly. We could afford a thoughtful approach, not only because our private ownership shielded us from short-term financial pressures, but also because we got Vanguard at an affordable price.
I knew there was no significant financial risk to Enterprise, even if the deal did not work out. Although we lacked experience in major acquisitions, we moved forward in what turned out to be the right way. On August 1, after I signed the papers that closed the deal, my family and members of our executive team flew to Tulsa, Oklahoma, for an evening meeting at Vanguard headquarters.
I introduced myself and my family, stressing our commitment to making this combination work over the long term. I was convinced that the same business philosophy that had propelled our growth would drive Enterprise and Vanguard together.
I emphasized that as a family-owned organization, we aimed to bring stability and continuity to Vanguard. This was welcome news at a company where a series of ownership and management upheavals over the previous decade had left employees feeling a bit unsettled and disenfranchised. I also announced that as part of our measured and steady integration process, Vanguard would operate as an autonomous subsidiary for at least a year.
We colocated the three brands at airports and removed brand identification from vehicles so that the operations could share cars when necessary. When a new direction was chosen, it would reflect the best elements of both cultures and operating approaches. Vanguard clearly had a lot to teach us about airport operations. At Orlando, LAX, and other big airports, National and Alamo managers presided over thousands of rental transactions every day.
Their systems and processes operated on a much bigger scale than ours. At the same time, they had a quality assurance process that was specifically designed to head off potential problems.
We eventually adopted this program at Enterprise airport locations—an illustration of how we took ideas from Vanguard when they complemented or were better than our own.
Meanwhile, we used the first year not only to listen and learn but also to share our values and practices. From the beginning it was understood that we had a lot to teach about achieving consistently high customer satisfaction. The index confirmed that customers who were fully satisfied with our service were three times as likely to rent from us again.
Vanguard immediately adopted the index for both Alamo and National, although it informally tracked results for six months before fully implementing it. During this get-acquainted period, our St. Louis—based integration committee analyzed many issues, including the brand portfolio, the general management structure, and the question of franchises. One key question was whether we would maintain all three brands or combine Enterprise and Alamo.
And they were willing to pay a premium for those benefits. Alamo, on the other hand, was a destination brand for vacationers, often from outside the United States, who were headed to places like Las Vegas and Disney World.
Its customers generally looked for bargains on the internet. Each brand had significant value and offered its customers what was most important to them. So we worked to reinforce the distinct character of each. Our back-office operations, though, were a different story. We were very interested in finding operational ways to leverage our joint ownership. Because Alamo and National facilities were generally colocated at airports, we tried to position Enterprise as close to them as possible, and we removed brand identification from vehicles so that the operations could share cars when necessary.
This fleet management approach increased flexibility and lowered costs. Next we had to decide on an organizational structure. For Vanguard, virtually all management decisions were centralized in Tulsa.
We debated about the best way to run a multibrand airport operation, and the more we looked at it, the more we saw the advantages of adapting our regional structure. This meant, however, that many Enterprise general managers would have to oversee big, factorylike operations at airports, manage discrete market segments, and strike the right balance in promoting all three brands.
At the same time, most Vanguard employees would need a better understanding of the home-city market.
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