Driving for Business, Rental Fleets Go Green

To keep customers coming despite high gas and airline costs, rental car companies are offering more fuel-efficient cars

by Jim Henry

Vacation travelers worried about high gas prices will find a lot more import brands at the car rental counter this summer. Toyota (TM), Mazda (MZDAF), Hyundai, Kia, and others for the most part get better gas mileage than big, domestic cars and SUVs.

A very limited number of gasoline-electric hybrids are also available at airport locations for travelers who are really determined to save on gas. Hertz (HTZ), for instance, bought 3,400 Toyota Prius models to add to its so-called "Green Collection" of cars that get an EPA-estimated 28 mpg on the highway or better.

Enterprise Rent-a-Car, which also owns the Alamo and National brands, says that in its total fleet of 1.1 million vehicles, it has about 4,000 hybrids; about 73,000 flex-fuel vehicles that can run on 85% ethanol; and almost 450,000 vehicles that get at least 28 mpg. The Avis Budget Group (CAR) also offers hybrids and other fuel-efficient vehicles.

A Chrysler Electric Runabout

Many tourist destinations have local businesses that rent so-called NEVs, or neighborhood electric vehicles. Especially at beach destinations where traffic is restricted, the low-speed, battery-powered NEVs can be a practical way to get around. By law, NEVs can't exceed 25 mph. They've been sighted in Tybee Island and Jekyll Island off the Georgia coast; Key West, Fla.; Maui; and many overseas destinations in the Caribbean and Europe.

"No need to worry about expensive gas," says the Sunshine Key West Rentals Web site. Like a lot of similar operations around the country, Sunshine Rentals offers NEVs built by Global Electric Motors, a Chrysler subsidiary based in Fargo, N.D. GEM sells about 4,000 NEVs annually.

As gas prices passed $3 per gallon and then $4, domestic automakers in the last 90 days saw a disastrous acceleration in the trend away from big pickups and SUVs, and toward small cars and crossovers. Rental fleets are experiencing somewhat higher demand for fuel-efficient vehicles, but it's not nearly as pronounced as in the new-car market, the rental companies said.

So far, vacationers who need room for passengers and luggage are not switching to smaller vehicles in large numbers, said Laura Bryant, a spokeswoman for privately held National Rent-a-Car, based in St. Louis. "Our customers are definitely sensitive to [gas prices], but they're not renting fewer full-size cars and SUVs. They need room on vacation for luggage," she said in a phone interview.

Coping with Economic Pressures

Joe Nothwang, Hertz executive vice-president, made a similar remark in a May 28 conference call with industry analysts. "People rent cars because of the specific functionality of the vehicle they're going to rent. If you've got two couples going to Hilton Head to play golf, a Ford Focus just isn't going to hack it, so they go with the sport-utility," he said.

Nor are the rental companies experiencing a sharp drop in demand overall, unlike the Detroit Three automakers. Despite expensive gas, a troubled U.S. economy, and worries that business and vacation travel could suffer, revenues were up in the first quarter for the two big, publicly traded rental companies, Hertz and the Avis Budget Group.