Tuesday, August 29, 2006

Rental Car "Upgrades"

The last article I read before leaving my flat to pick up a hire car on Saturday morning was this:

Freakonomics at Work in Rental Cars

It describes a guy who reserved one class of car but, when he arrived to pick it up, he was warmly greeted with news that he had been "upgraded" to a bigger, better model "at no extra charge!!"

The argument for why this was a bad thing went like this:

  • Fuel prices are high
  • So gas guzzlers are not selling
  • So car manufacturers are selling cars with bad mileage to the hire firms at knock-down rates
  • The hire-firms then rent these out to unsuspecting customers who think they have received a bargain - when, in fact, they are about the be stung for far more fuel than they anticipated
  • An extension to the scam is that hire firms will try to sell you a full tank of fuel "to save you refuelling at the end of your hire period" - and so will benefit from selling a car with a bigger tank.

Very interesting, I thought.

And then Hertz at London City Airport stung me with the scam thirty minutes later!

We had booked a Ford Mondeo 1.8 - nothing special, but enough for three people and their bags.

We were congratulated on having been upgraded to a two-seater Alfa Romeo. I pointed out that three people would not fit in it.

The guy paused for a second before offering us  Saab 9-5 instead.

Now, a 9-5 isn't that much bigger than a Mondeo so I checked it was the same engine size ("It's a 2.0l - but we could have given you a 2.0l Mondeo in any case"). So far, so reasonable. He also let slip that it was an automatic but I wasn't quick enough to start smelling the rat.

The reality: after we had signed the paperwork and gone outside, it transpired that this was a monstrous estate car with a 2.3 litre turbo-charged engine.

We were running too late to argue so took it.

The car was very nice to drive and very fast. But we barely scraped 30 miles per gallon (on a 650 mile round trip).

Somewhere in Hertz HQ, they probably think this little system is win-win for all concerned. And, mostly, it is.... unless you're driving a long way and petrol is learly £1 per litre...

3 comments:

DarkKnight said...

How do they make money on this? (unless you pay them to fill up the car for you, in which case you pay them for the privilege anyway)
If they had a deal for a certain petrol station then I would agree that they might get something back, but I can't see it.

Richard Brown said...

Sorry - didn't make myself clear.

One scam is well-known and nothing to do with the "upgrade" - they offer you a "good" price on a full tank of fuel when you pick up the car, the pitch being that it removes the need to worry about refilling it.

They make their money here by 1) offering a rate that isn't that great anyway and 2) relying on the fact that they will charge you for a full tank even if you bring it bank half full.

The scam I'm talking about here is more subtle. They don't make any money as a direct result of your taking the "upgraded" car. Rather, the gotcha is that you are tricked into believing you are getting a good deal ("woo! a free upgrade!") when in fact you're getting a car that may well have cost them less to purchase than the one you actually booked and which will cost you more to run during the period of the hire.

Now, of course, from another perspective, you could argue that there's no problem: if you accept the upgrade you're implicitly saying that you value the upgraded option more than the one you booked - in which case it's a win-win situation.

Where I think this breaks down is that the implications for fuel cost are not immediately obvious and so the customer is making the decision from a position of limited information.

The correct solution to the problem is probably gratefully to accept the upgrade and then complain like hell when you return it in an attempt to get some money refunded :-)

Ben said...

Ive just returned from a 9 day trip to San Francisco, Napa Valley and Yosemite national park. I took 2 Hertz rentals - 1 booked through Expedia as an intermediary and the other direct with Hertz using my employers leisure rate (I massaged my ego with a few days driving a Ford Mustang convertible). On my first rental I took the upgrade option which although ended up stinging me for more gas consumption gave me the added bonus of free satnav, which Hertz only offers with higher range models ... maybe this is another good argument for why an upgrade is not always such a bad deall for the consumer. I should also add that I took the "bring it back empty" option by paying for a full tank of gas on both rentals ... my main reason was for the convenience - i didnt want to have to track down a gas station at the end of a 300 mile trip trying to make my flight - i can live without the stress on holiday :o) Overall I have to say that I found Hertz rates to be pretty fair - I dont feel ripped off ... However, altering any booking, and dealing with their useless staff was an absolute nightmare - they dont answer direct questions, dont know their own systems and are thoroughly useless. Right. Rant over, now back to my day. :o)