History of Car Rental, Hire Car or Car Hire

History of Car Rental, Hire Car or Car Hire

Horses, chariots, carriages and the like have been rented since time immemorial. The earliest known example of cars being offered for rent dates to 1904.

Joe Saunders of Omaha, Nebraska is generally credited as the inventor of the car rental business. He started with one borrowed Model T Ford in 1916, and by 1917, his Ford Livery Company was renting out 18 Model Ts at 10 cents per mile. The company name became "Saunders Drive-It-Yourself System" and then "Saunders System". By 1926, Saunders had expanded to 56 cities.

An early competitor to Saunders was Walter L. Jacobs, whose Chicago-based Rent-a-Car opened in 1918 with twelve Ford Model T.  The sector expanded rapidly; in 1926, the American Driveurself Association assembled over 1200 delegates in Chicago. Jacobs' company became Hertz and Saunders' company was bought by Avis in 1955.

Business models

The Rental Car Center at George Bush Intercontinental Airport

Car rental companies operate by purchasing or leasing a number of fleet vehicles and renting them to their customers for a fee. Rental fleets can be structured in several ways – they can be owned outright (these are known as ‘risk vehicles’ because the car rental operator is taking a risk on how much the vehicle will be sold for when it is removed from service), they can be leased, or they can be owned under a guaranteed buy-back program arranged directly through a manufacturer or manufacturer’s financial arm (these are known as ‘repurchase vehicles’ because the manufacturer outlines the exact price of original sale and of repurchase at the end of a defined term).

In the UK, the registration of rental cars can be concealed by using unfamiliar initials or subsidiaries, which can increase the resale value via manufacturer or third party dealers. In North America, it is common to see rental companies with their own branded second-hand car dealers where ex-rental stock is sold direct to the public. Alternatively, auctions are often used such as Manheim Auctions in the USA.