Beefing up the green fleet
Taking advantage of increased supply, car rental firms expand hybrid offerings
Even as the recession and lower gas prices have chilled demand for hybrid vehicles, many car rental companies are adding to their fleets of Priuses and other gas-electric cars to lure a growing number of city dwellers attracted by high-mileage and "green" appeal.
After last summer's record-high gas prices, when there were waiting lists for
But rental companies are taking advantage of the lower demand, which is making the cars easier to get. For instance, last month, Zipcar Inc., the car-sharing company based in Cambridge, added 21
In February, Enterprise Rent-A-Car Co. bought 5,000 hybrids for its US fleet and Alamo and National subsidiaries, bringing its total to about 9,000 out of nearly 854,000 vehicles. Most of the new cars are clustered in 24 cities at locations that stock a "high concentration" of hybrids, the company said.
And instead of charging the typical premium price for a hybrid, Zipcar slashed hourly rates on its hybrids from $10 to $7 last summer, making them the cheapest cars available from the company. Of its 6,000 vehicles worldwide, about 15 percent are now hybrids, according to Zipcar.
"We really want to promote the use of these cars," said Dan Curtin, Zipcar's Boston general manager. "Our members, as a group, are more environmentally conscious."
Along with premium compact models from BMW, Mini, and Volvo, hybrids are a hit among Zipcar's customers, who rent the company's cars by the hour instead of by the day, and often don't own their own vehicles.
"There's a strong undercurrent of interest in the environment for members, so having a percentage of hybrid cars in the fleet is attractive," said Dave Brook, who founded the country's first commercial car-sharing service in Portland, Ore., in 1998, and now consults on the subject.
From 2004 to 2008, car-sharing membership grew by an average of 53 percent annually, according to a University of California Berkeley study released in November. Susan Shaheen, one of the study's coauthors and director of the university's Innovative Mobility Research group, said the US car-sharing market's estimated 310,000 members and 6,090 cars will continue to expand and attract conventional rental companies.
Some of the major rental companies - spurred by Zipcar chief executive Scott Griffith's prediction that his company will reach $1 billion in revenue within the next decade - are expanding their car-sharing divisions, with hybrids as the main attraction.
"Growth in the car rental business has been flat for the past couple of years," said Brook. "The better capable car rental companies are looking around" for a way to increase revenue, he said.
Last September, Enterprise launched WeCar near its St. Louis headquarters. It's an all-hybrid car-sharing service geared to businesses, universities, and municipalities. The company has 800 members in St. Louis, but has no plans to offer it to the public elsewhere, though it provides the service to businesses nationwide, including Google's headquarters in Mountain View, Calif.
Hertz Corp. is gunning straight at Zipcar with the "Connect by Hertz" car-sharing program launched in New York, London, and Paris last December. Spokeswoman Paula Rivera said Hertz has "more than tripled" the New York fleet's 30 cars, comprised of Mini Coopers, Camrys, and Priuses. Pricing tiers mimic that of Zipcar, with hybrids being rented at the lowest hourly rates. By midsummer, Rivera said, it plans to include Boston.
But even as their green fleets grow, rental companies say hybrids are still tougher to buy than regular models.
"It's a supply and demand issue," said Enterprise spokeswoman Lisa Martini. "We're at the mercy of the manufacturers on the hybrids."
IHS estimates hybrid sales overall will crack 420,000 units this year, a 23 percent increase from 2008, and roughly 4.4 percent of the US auto market. Yet Honda and Toyota, the nation's best-selling hybrid manufacturers, haven't been as eager as domestic automakers to feed the rental market, for fear of declining resale values.
Honda spokesman Chris Naughton said in an e-mail the company - which has a minority stake in Zipcar - would rather cut production than "force extra sales with costly cash to customer incentives or harmful [in the long run] fleet sales."
Brook, who now works as a consultant for Daimler AG as it plans to build a car-sharing fleet of Smart fortwos in Austin, Texas, said controlling monthly vehicle costs is the car rental industry's biggest challenge, especially when pricier hybrids are added.
Because daily rental companies purchase vehicles rather than lease them like Zipcar, their upfront costs are higher than car-sharing companies, and so are the daily rates for their hybrids. At Enterprise, they typically cost up to $15 more than a "standard" rental, said Martini.
Hertz, which launched its "green collection" in 2006, didn't offer hybrid rentals until 2007, when it finally cut a deal with Toyota for 1,000 Priuses. The company now stocks about 5,000 hybrids out of nearly 311,000 vehicles.
"Would Hertz try to get out into the 'burbs like Zipcar has?" Brook said. "It's too early to tell."
Clifford Atiyeh can be reached at catiyeh@globe.com.
Clarification: Dave Brook has consulted for Daimler, but says he is not doing so currently. 