Car Rental History

One of the most significant businesses that have marked the 20th century is car-renting. Car rental agencies primarily serve people who have a car that is temporarily out of reach or out of service or travelers who are out of town or owners of damaged or destroyed vehicles who are awaiting repair or insurance compensation.

In USA this business started in 1916 when Joe Saunders from Nebraska started a car renting business with a Ford Model T he owned, renting the car to local and visiting businessmen. By 1925 Saunders had car rental operations in 21 states. By then, The Chrysler Company ran full-page ads boasting that Saunders had purchased $1 million worth of Chrysler automobiles.

Unfortunately in 1930s, during the Great Depression Saunders went bankrupt.

In 1918 Walter L. Jacobs started renting Model T Fords in Chicago and by 1923 his business was grossing over $1 million in annual sales. Later John Hertz, who owned The Yellow Cab and Yellow Truck and Coach Manufacturing Company bought the business from Jacobs. General Motors bought out Hertz's Yellow Truck Company in 1926, and named the car renting business as the Hertz Drive-Ur-Self System.

Another major rental car agency, National Car Rental System, was formed in St. Louis, Missouri, on August 27, 1947, by 24 independent car rental operators who hoped to broaden their market influence by teaming together. Among the original founders of the company was, again, Joe Saunders.

In the early 1970s, the industry also moved into the used-car business, selling used rental cars directly to the public.

Increased competition in the rent-a-car industry in the 1970s and 1980s led to price wars and innovative give-away and bonus programs. This competition lead to many companies struggling financially by 1985. Rental car industry was also an effective marketing tool, as millions of potential car buyers were exposed to the newest models from the manufacturers every year.

The Car Rental industry now carries an inventory of about 1.7 million cars in the U.S. market alone (up from about 135,000 cars in 1965), according to Auto Rental News, which aggregates information on public and private car rental companies.

According to 2003 data from rental companies, online bookings have become important for the industry, with 21% of the bookings coming from online agencies and 15% directly from the companies' web sites.

Importance of online bookings is expected to grow further, aided by the ability to compare several rental companies easily online, which should also keep prices in check for the sector in general.

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