The History of
the Car Rental
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The History of the Car Rental Industry

History of the Car Rental IndustryWhether you're planning a trip to some foreign land or you just need a loaner vehicle while your car's enjoying a tune-up, chances are you've had to rely on a car rental at some point along the way. And yet, even though we've all used them, very few of us actually know the history behind the car rental industry and how it grew to become such an important part of every day travel.


History of Car Rentals: The Beginnings
The U.S. car rental industry is believed to have began back in 1916, when a Nebraska man by the name of Joe Saunders decided to lend out his Ford Model T to local and visiting businessmen. This savvy entrepreneur affixed a mileage meter to the left front wheel of the vehicle and would charge renters a total of 10 cents a mile in order to cover the wear and tear on his beloved Ford.


It didn't take long for Saunders to realize he'd stumbled onto a lucrative business idea. By 1925, Saunders' independent car rental company had grow to include operations In 21 states. Saunders also began to diversify his vehicle offering at this point – old Chrysler ads from the 1920's boast that Saunders' fleet included nearly $1 million worth of Chrysler vehicles.


The Battle Begins

Competitors quickly caught onto Saunders' unique rent-a-car model, and it wasn't long before Walter L. Jacobs started renting out a dozen or so Model T Fords of his own. By 1923, Jacobs' business was grossing more than $1 million in annual sales, making him Saunders' main competitor.


Both Saunders and Jacobs built their independent car rental businesses from humble beginnings, but only one would come out on top. In the mid 1920s, Jacobs made the acquaintance of Mr. John Hertz, owner of The Yellow Cab Manufacturing Company in Chicago. Hertz eventually bought Jacobs' car rental company, giving birth to what is now one of the largest chain car rental companies in the nation. Later, General Motors would buy out the Hertz's Yellow Cab Manufacturing Company, renaming the car rental portion of the business the "Hertz Driv-Ur-Self System."


The Second World War, along with the expansion of the nation's rail system, helped facilitate the growth of car rental demand all across the United States. Railway Extensions, Inc., worked with rental agencies, allocating space for rental booths at railroad stations. They even provided telegraph service for rail customers so that they could reserve cars at one station and pick them up at another destination.


Thank goodness we can now rely on the Car Rental Express reservation system to book rentals in advance!


A Booming Industry: Car Rentals from 1946 – 1970s

The car rental industry continued to burgeon following World War II. In fact, statistics from that time showed the car rental industry matched the growth rates of another popular transportation method – airlines. As airline passenger numbers grew, so too did the need for more rental vehicles. As with the railroads, it wasn't long until car rental companies began opening rental locations inside major airports. Hertz is credited with opening the first airport car rental franchise in 1932, providing travelers at Chicago's Midway Airport with a selection of top-notch vehicles.


The real king of the airport car rental business didn't emerge until 1946, when Mr. Warren Avis launched the Avis Airlines Rent A Car System at Detroit's Willow Run Airport. Avis began his business with just three vehicles. Unlike other rental companies, which focused the majority of their attention on "downtown" rental locations, Avis directed all of his efforts on building airport franchises. Avis even used the airlines themselves to promote his company and attract new clients fresh from the skies.


A Quick Look at the Independents
Being an independent car rental company during the 1940s was tough. Competition was fierce, and companies need to have unlimited resources in order to take advantage of the expanding marketing. This need for a greater market influence is what eventually promoted 24 independent car rental companies in St. Louis, Missouri to band together, forming the National Car Rental System in 1947.


The Car Rental Industry Today
The car rental industry has experienced a lot of bumps and bruises over the past thirty years, as increased competition has created the need for innovative discount programs and complex price wars. This cut-throat competition resulted in many independent car rental companies going under during the early 1980s.


Big automotive companies started taking an interested in the car rental industry in 1980, as top guns like Ford and Chrysler purchased controlling interest in some of the larger chain rental agencies. To this day, many of the larger chains are still controlled by automotive manufacturers.


Recent Turmoil

The car rental industry, along with the airlines and other forms of travel, suffered a major blow in 2001 following the terrorist attacks in New York City. Today, the car rental industry is stronger than ever, thanks to convenient online reservation systems and useful price comparison tools. The Auto Rental News estimates that the U.S. car rental industry boasts more than 1.7 million rental vehicles – a number that's expected to continue to grow.


So Whatever Happened To Saunders?

Saunders, like the car rental industry itself, experienced some major ups and downs. During the early 1930s, Saunders became a victim of the Great Depression, declaring bankruptcy. But, all was not lost. Remember those 24 independent agencies that banded together to form the National Car Rental System? Among the original founders was one Joe Saunders.

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