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Consumer Affairs
Sunday, July 1, 2007
It hurts with hertz

A survey of car rental prices – we spoke to six firms – indicated a remarkable similarity in fees, suggesting that collusive and monopolistic practices are rife in the industry (see table 1).

The table shows the rental price for a ‘small’ vehicle. The costs are in some cases virtually identical. How can this be if it were not for collusive pricing practices? The price range is just R37 and this can be lost in any subtle differences like free kilometre adjustment, price per kilometre and so on. Prices may even vary from day to day making comparisons deliberately difficult. Indeed there are as many prices as there are affinity programmes, package deals, “impressive promotions”, and special discounts. In effect prices are no more than “a moment in time”, subject to change without notice. Trying to get a good (and fair) deal with such moving targets is almost impossible. That could be the intention.
Also deliberate is a clear policy of disguising the true make up of the charges. While a client is presented with one rate plus a ‘contract fee’, in fact there are no less than eight components to the total cost, one of which, fuel, is never mentioned. The client will be forgiven for assuming ‘free 200 kms per day’ would include petrol. For how can a vehicle go 200kms without fuel? But in fact the free kilometres ploy actually means free of charge for distance travelled. There may be further confusion when you realise the distance travelled is not part of the car rental component of the fees, but a separate fee (see table two). So it’s ‘free’ if, for example, you opt to pay for 200 kms a day.


Even more disturbing is the high amount now charged for so-called ‘collision damage waiver’ and ‘theft waiver’ (see main story).
As for the actual cost of car hire, the story does not stop at the quoted daily rate. A particular experience with Hertz revealed more smoke and mirrors than you’d find at a magicians’ convention. Indeed, you need rear view mirrors to see what’s going on. Part of the problem is the high numbers of car rental contracts that are taken out by, or on behalf, of corporates. The costs are simply signed off by the user without a single thought in the world. Accounts departments then pick up the tab. Nor are they ever likely to receive a detailed invoice.
Meanwhile, the following will explain why R99 is actually R484 when hiring a minuscule vehicle from Hertz at Johannesburg airport.
The Hertz counter clerk was fairly disinterested and quite secretive about the information. The exercise for her seemed tedious and unnecessary. It was clear from this that rental firms were unused to being challenged about their pricing, nor to discussing the finer points. Indeed, one almost felt rood in asking for details, and anti-social in holding up the queue. People just want their car and to get away: accounts will deal with the details. This lack of engagement in the process by the immediate rental client who would not normally be responsible for the payment has a lot to do with why abuses of the system have become so entrenched.
The vehicle in the specific case was a so-called Q class which, despite its position in the alphabet, was the cheapest rental on the books. It turned out to be a vehicle without radio, without air-conditioning, without central locking. But it did have four wheels. And I think it had a steering wheel. It was an Opel Corsair Lite.
Anyway, the daily rate was R99.00. Didn’t seem too bad.
The credit card was taken to guarantee payment, and eventually a debit arrived on the account of R484.00. Astonishing, eh? How they got to this amount is an exercise in the grandest help-yourself scheme imaginable. No billing, and total carte blanche on the account of any car rental client (see table 2).
Here are the details. First, you have to pay an additional amount for a minimum 200kms ‘free’. If you drove more than this then a further R1,36/km would be charged. The point about the free kilometres is that they are charged for even if you don’t drive them. So Hertz  added R121.00 for the free kilometres (actual distance travelled was 135km). Next comes ‘insurance’, the subject of our main story. This added another R153 to the daily rate.
Next add airport surcharge and tourism levy, which perhaps you can’t argue with if you are at an airport. But two clerks in our survey said the airport surcharge was included in all contracts regardless of the hiring location. Both are levied on the basic rental (that is on the R220 in our example including VAT) at the rate of 9% and 1% respectively, so as an aside it’s a tax on a tax. A further boost comes from probably the cheekiest add-on, a contract fee of R25.00! It is just a form you have to sign – a mere formality, but is actually the car rental firm’s contract which is legally binding. You have to sign it without lawyer present. And don’t even start to ask the clerk to explain it: they have no legal background, and in any case will be looking over your shoulder at the queue forming behind you.
Finally the biggest surprise is petrol, in this case R68,24. They get this by topping up the fuel tank of the vehicle when it is returned by the customer. Most people would sigh acquiescence when told they must obviously pay for the fuel used. And indeed that is reasonable. But what is misleading is to claim you’re giving the client ‘free 200kms’ a day (when you are charging R121 for it); and also for the fuel to go that 200 kms.
Now either it is free or it isn’t. None of the rental clerks explained the fuel charge when providing their quotes.
And no one stands over the person refuelling the vehicle either. It is open to abuse. You need to ask for a detailed bill and check the claimed distance travelled and estimate how much fuel should have been used – if you’ve a mind to. But pretty well everyone would never check.
Go to any major airport and walk into any car rental cavern: it’s bedlam and in the fray the companies are getting away with collusive pricing, hidden charges and dubious insurance-related practices. Remember, when you get a basic quote, make sure of the additional charges — you could end up paying a further 389% for the smoke and review mirrors. By Nigel Benetton
 

Copyright © Insurance Times and Investments® Vol:20.6 1st July, 2007
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