DAILY RENTAL: How to make car clubs work
27 October 2009
Neil Cunningham, UK general manager, Hertz
Neil Cunningham, Hertz's UK general manager and European boss of the brand's car club, Connect, talks to Tristan Young about why he thinks the daily rental firm can make the car club concept work
Car clubs are not new. There have been many launched over the years and almost as many closed, but they're busy making a comeback, with lots of small businesses offering car clubs with an eco tag.
However, the only major daily rental firm getting into this market is Hertz with its Connect brand.
Not a firm for doing things by halves, Hertz launched its car club in December of last year in three countries, currencies and cities - London, Paris, New York.
Initially, the company planned Connect as a retail business for "consumers who didn't want to own a car because they're in a city. People who think cars aren't good in cities".
However, it has since found significant demand from the corporate market.
"We found a huge interest from our corporate customers. Corporates were typically saying 'we've got pool cars and they're not treated well'. They said our technology gets round that problem."
This technology, which incorporates RFID (radio frequency identification) and telematics, as well as the use of call centres, was so important to Hertz's plan that it bought the company that developed it, making sure a rival couldn't get its hands on the ideas.
The fleet model works in a similar way to the retail one, but rather than private individuals joining the club, employees join. And rather than cars being based on the street, the car-club vehicle is based at a business premises providing the corporate partner guarantees enough car use.
Hertz, though, encourages businesses to make the cars available to all Connect members, not just employees.
The company has well over 100 vehicles on the scheme but that figure is growing steadily and geographically, expanding from London.
"In London you're never more than 10 minutes walk from a car," says Cunningham.
Cunningham admits that with Connect being less than a year old it's too early to say for definite if it's working. However, he says the reason it will work where others have failed is that Connect can piggy-back on the regular daily rental business. He explains: "Our purchasing power helps. And we didn't have to set up a call centre."
He continues: "And the market has changed now so the Avis and Budget previous schemes aren't comparable. Also, we can get people to join Connect after using the regular rental service or vice versa."
Cunningham says the comparison between regular daily rental versus car clubs and short-term versus long-term parking is a good one. You pay slightly more per hour for the convenience of short-term parking or a car club, but don't use it for as long.
He also says "there are two definitions of success: that the technology works and that the business model works", and that "the type of car does play a part" in achieving that success. "It's also important that the cars are fun, interesting or different," he adds.
"Vans are proving very popular, too - for that trip to B&Q or Ikea at the weekend."
Cunningham concludes: "The business is on-track and we're confident of success - we've already had success with the technology. We know from our growth in members that we're now on our way to business success."