Photograph ©2022 by Brian Cohen.

Did Two Rental Car Companies Use Predatory Pricing to Increase Rates?

Two members of Congress want to know.

The parent companies of two rental car agencies are accused by two members of the House of Representatives of the United States in engaging in predatory pricing by allegedly using their market position to increase rates substantially for renting vehicles — leading to record profits and sizeable payments to shareholders — even though the cost of total expenses decreased.

Did Two Rental Car Companies Use Predatory Pricing to Increase Rates?

Photograph ©2022 by Brian Cohen.

Raja Krishnamoorthi — who is the chairman of the Subcommittee on Economic and Consumer Policy — and Katie Porter sent letters to both Hertz Global Holdings, Incorporated and Avis Budget Group, Incorporated on Friday, March 18, 2022, requesting information about the pricing of renting vehicles, which have reportedly increased by 24 percent over the past year.

“Hertz and Avis undertook cost-cutting measures, including downsizing their fleets, decreasing their expenses by nearly $3 billion and $1.2 billion, respectively”, according to this official press release from the two members of Congress, who are both members of the Democratic Party. “However, both companies’ prices went up. Avis customers were charged approximately 26% more in 2021 compared to 2017 through 2019—resulting in a record net income of nearly $1.3 billion for the company. Hertz customers saw prices go up by approximately 39% in 2021, while the company achieved a net income of $366 million — 2,395% greater than its average net income from 2017 through 2019.  This strong financial performance came after Hertz filed for bankruptcy in May 2020 and was able to shed $5 billion in debt. Since then, the company has announced $2 billion in planned stock buybacks, and placed a $4.2 billion order to add 100,000 Tesla vehicles to its fleet.”

An official press release from Hertz on Monday, October 25, 2021 contained the announcement that the rental car company seeks to have the largest fleet of electric vehicles in North America — which will include an initial order of 100,000 vehicles manufactured by Tesla — by the end of 2022; and it will also boast a new infrastructure for charging those electric vehicles across the global operations of the rental car company.

Hertz Global Holdings, Incorporated and Avis Budget Group, Incorporated — along with Enterprise Holdings — are the three major companies which control greater than 90 percent of the rental car market in the United States.

Documents and information were requested from both companies to explain the increases in the rates of renting vehicles despite falling costs, as well as a list of any known investigations into these price increases. Hertz and Avis were also asked to explain what steps — if any — they plan to take to ensure that renting vehicles become more affordable in the coming year.

Those questions must be answered by Friday, April 1, 2022.

Final Boarding Call

Photograph ©2013 by Brian Cohen.

I have read numerous allegations about commercial airlines and lodging companies taking advantage of the current 2019 Novel Coronavirus pandemic to offer fewer products and services while charging increased prices — but many of those accusations are currently unfounded or based on circumstantial evidence…

…but if Avis and Hertz have indeed been proven to prioritize maximizing profits and shareholder payouts at the expense of consumers — thereby shamelessly taking advantage of them — this could lead into similar investigations pertaining to commercial airlines and lodging companies.

“We are all in this together.” Indeed…

All photographs ©2013 and ©2022 by Brian Cohen.

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