Going in Style Proves Boon to Luxury Car Rental Firms
Two years ago, Presidential Limousine Service sparked a full-scale revolution in the local car-rental industry when it added a flashy red Mercedes-Benz 380 SL to its fleet of limousines.
The sporty convertible rented for $100 a day and was an immediate hit.
“We couldn’t keep the car on the lot,” said Presidential manager Mark Kasmer. “So we gradually began acquiring more luxury rent-a-cars.”
Today, the Mission Valley firm’s selection of luxury rental cars includes six Porsche 911s, two Mercedes 380 SL convertibles, two Mercedes 300 SD sedans, two Corvettes, a Porsche 928 and a Pantera race car.
Daily rental rates range from $115 for the Corvette T-Top to $175 for the Pantera and Porsche 928, Kasmer said. And most of those cars are rented out an average of 10 days each month, Kasmer said.
“Demand has consistently gone up, and so has our fleet,” Kasmer said. “We bought our Corvettes and Pantera within the last four months, and we’re currently looking for a Rolls-Royce Corniche. It’s definitely a growing market.”
Indeed, since 1984, more than a half-dozen other San Diego car-rental agencies have joined in with scores of pricey Porsches, Mercedes-Benzes, Corvettes and even a couple of Rolls-Royces and Ferraris.
“America is becoming more and more preoccupied with luxury,” said Mike Jolander, manager of Rich and Famous Limousine Service. “People are tired of showing a low profile. They’re out to impress others as well as themselves.”
Rich and Famous entered the high-end rent-a-car market a year ago with a single Corvette T-Top, Jolander said. Today, the agency’s fleet of luxury vehicles numbers six, including three Corvettes, two Porsche 944s and a Mercedes-Benz 500 SL European coupe.
Daily rental rates range from $140 for the Corvettes and Mercedes-Benzes to $145 for the Porsches, Jolander said, with each car leased out as often as 10 days per month.
“This gives people a chance to boost their egos and become somebody, if only for a day,” Jolander said. “All these television shows promoting the life styles of the rich and famous, like ‘Dallas’ and ‘Dynasty,’ have a lot to do with it. People are saying to themselves, ‘Why can’t I be like that?’ Now, they can be, even if they can’t afford to buy these expensive cars themselves.”
Car rental agencies have long acted as a sort of barometer for worldwide economic conditions, said K.C. Christman-Hutter, manager of Southwest Leasing’s four San Diego car-rental lots.
In the 1970s, when the fuel crunch sent gasoline prices soaring and inflation was at an all-time high, the local car-rental industry was dominated by agencies with names like Rent-a-Wreck and Rent-a-Dent, Christman-Hutter said. Customers were renting compact clunkers such as Pintos, Pacers and Gremlins for less than $10 a day.
Today, with gas prices and the inflation rate relatively low, the opposite is true, Christman-Hutter said, “so luxury is once again affordable (and) corporate executives are no longer being told to rent only economy models.”
“Even ordinary customers don’t mind paying $95 a day for a Mercedes because they know that with gas prices as low as they are, it won’t cost them too much more to keep the gas tank full,” she said.
Southwest Leasing’s fleet includes several Mercedes-Benzes, Porsches, Corvettes, Ferraris and Rolls-Royces.
Daily rental rates range from $95 a day and 40 cents a mile for Mercedes-Benz 500 SLs and SELs and Porsche 944s to $350 a day and 50 cents a mile for Rolls-Royces, Christman-Hutter said.
And, for an additional $8 a day, Southwest will equip the Mercedes with a cellular telephone.
Getting into the high-end car-rental business is not as easy as it seems, however.
The initial investment is high, and so are depreciation expenses, said Kasmer, who cautioned that insurance costs can be prohibitive.
Sam Ladki, owner of Ladki Rent-a-Car on Bankers Hill, will attest to that. His inventory of 250 rental vehicles includes only 10 luxury Mercedes-Benzes, which rent for $69 to $127 a day and 30 cents a mile.
Ladki used to carry BMWs, Porsches and a Ferrari. But customers “would take them out on the road and blow the engine by driving too fast or else get in wrecks,” Ladki said.
That kind of track record makes insurance for sports cars unreasonable, according to Ladki, who now limits his upscale rentals to “Mercedes sedans, which people seem to treat a lot better than they do sports cars.”
The luxury rent-a-car market is growing but most people are “ . . . still looking for cheapies, and I don’t think there’s a rental car agency in town that can exist by renting just Mercedes and Porsches,” Ladki said.
Not surprisingly, low-end rental car agencies say the trend toward luxury vehicles has not hurt their business.
“There’s certainly a market for both,” said Steve Fink, co-owner of the San Diego Rent-a-Wreck agency who believes a customer could “rent a car from us one day, and the next day rent a high-end car from some other agency.”
“I think the trend toward luxury rent-a-cars is just that, a trend,” added Michelle Coker, manager of the two local Five Dollar a Day Rent a Car offices.
“It’s been growing for the last couple of years, but I see it leveling off in the near future, Coker said. “But the market for low-end rent-a-cars will always be there, simply because most people who rent cars are still looking for basic transportation.”
