The Mega Brands That Built America Recap for Rentals to Riches
-This week’s episode of The Mega-Brands that Built America on History tackles the rent-a-car business.
-Walter Jacobs was working in the car business, with marginal success. However, he saw a standstill when the hype of owning a car died out. While people enjoyed driving cars, very few knew how to do so correctly.
-Many people liked the idea of driving, but not owning a car, upsetting Walter….until a potential customer offered to pay to test drive the car at his leisure….thus, the rent-a-car business was born. His father had a similar business renting out horse and buggies, so he decided to take the idea to the next level.
-In 1918, he took his life savings and a loan from friends and family to work on the business. He believed in the business so much that he went all out offering 20 cents per mile, or ten dollars a day (with 100 miles included) ….upselling with a self-starting car.
-The business is off to a slow start, so Walter needed to educate the customer on how it would work. Many people didn’t like the idea of driving the car themselves, so he decided to advertise to make the concept clearer.
-Business began to boom, making Walter super-busy. He soon catches the eye of a Chicago businessman who runs a taxi company….in fact, he is the one who came up with the idea of a yellow taxicab.
-The man known as John D. Hertz saw that there were issues with the taxi business and decided that he wanted to get into the car rental business.
-The men get together to discuss collaborating and after some back and forth bring Hertz to the world. They not only offer cars to rent, but bring franchising to the table…with the help of some mom and pop shops. By 1925, they were in business coast to coast.
-Despite the success, John’s taxi company is facing problems. He decides to take a deal with General Motors to sell it, leaving Hertz in the lurch. This upsets Walter, even though he is still going to be president of Hertz and will be making millions. He now must prove he has what it takes to make the business a success.
-Walter works on ideas to appeal to the customers, including a better way to return cars and making traveling easier and cheaper. Thus, the one-way rental was born.
-While this was happening, numbered highway systems and train travel were taking off. Walter came up with the idea to have rental cars at train stations to make travel even easier.
-The business was booming, so Walter decided to expand to Canada in 1938. Europe was next on his list, but WWII put a wrench in his plans. Metal was being used in war efforts, so it stalled his plans. Cars were also not being built, causing even more issues.
-A particularly dissatisfied customer who was unhappy with his car and service decided to throw his hat in the ring—and would go on to start Avis.
-Warren Avis is a military veteran looking for his next big thing. He also uses his savings to invest in his business, but the federal government puts a damper on his plans. He tries to sell his new cars as used, but this doesn’t satisfy the customers. His new plan is to rent them out and then sell them as used.
-Hertz still has a hold on the rental business, so Warren decides to use airports to appeal to travelers who need cars after landing. This would one day become a multi-billion dollar idea.
-The idea first comes to fruition at the Willow Run Airport in Detroit. They would wait at baggage claim and convince people to use their business. By 1946, they are in business and Avis is about to take the rental business by storm…..by opening a location in Miami.
-Despite this, Walter was not worried about the competition….yet.
-Warren decides to work with American Airlines to advertise his business and would soon be collaborating with other airlines, leading to more companies to follow suit.
-This proves to be a success and by 1953, Avis is steep competition for Hertz, even becoming successful in Chicago….the birthplace of Hertz.
-Walter is now upset over this, who decides to get in on the action. However, Avis has exclusivity rights, making things complicated. This only makes him even more determined to beat his competition.
-The businesses are neck and neck, but soon Walter has to deal with the possibility to GM selling Hertz off to the man himself. The two of them come up with a deal and work on expanding the company, opening up locations in Paris, giving them 1,000 locations worldwide.
-More and more rental companies start popping up, flooding the market.
-Warren is now feeling the pressure and decides to sell the company for eight million dollars. He would go on to be an entreprenur in his own right.
-Avis and Budget now work together and surpass Hertz in the car rental business, with other businesses such as Enterprise joining the competition.
-More next week, stay tuned.
