Uber Technologies partnered this week with Hertz, one of the world’s largest car rental companies, to offer short-term auto rentals to ride-hailing drivers -- a move intended to court new drivers and keep current ones on the road.
The partnership, which launches in Los Angeles and will be rolled out to other U.S. cities in the coming months, will allow approved Uber drivers to rent a car from Hertz to drive for the ride-hailing company.
The weekly rentals cost $180, which includes auto insurance, unlimited miles, vehicle maintenance and 24/7 roadside assistance.
Uber has a similar agreement with Enterprise, which charges drivers $210 a week. Uber competitor Lyft also offers a short-term rental program through General Motors, starting at $99 with conditions. Outside of these programs, car rental companies typically do not allow customers to drive for Uber and Lyft.
Uber’s short-term rental programs are different from the company’s Xchange Leasing program, which offers longer contracts with the option to buy vehicles outright at the end of a lease.
Although the partnerships with Hertz and Enterprise are more expensive than traditional dealership leases, Uber is marketing them as an option for drivers who either need a short-term solution, or are trying out Uber for the first time.
“We have seen that both new and existing drivers use weekly rentals,” said Uber spokesman Michael Amodeo. “New drivers may use the weekly rental to give driving with Uber a try. Existing drivers have used the weekly rental options to stay on the road when their car is in the shop.”
For Hertz, which tries to maintain a fleet of cars that are less than 3 years old, a partnership with Uber gives its older cars a second life. “It lets us redeploy cars that rotate out of our consumer rental fleet that we think are a great option for ride-sharing,” said Hertz spokesman William Masterson.
Uber does not take a cut of the rental fee.
Partnerships like this one pit the incumbent car rental industry against newer start-ups that have cropped up to serve ride-hailing drivers.
Marciano Kim, chief executive of Los Angeles-based short-term car rental start-up HyreCar, believes there’s room for competition, though. “A lot of drivers don’t like being locked into conglomerate programs,” said Kim, whose company matches drivers who need a car with individuals looking to rent out their under-utilized vehicles -- a kind of Airbnb for cars.
The California Public Utilities Commission is currently deciding whether short-term rentals should be eligible for use as Uber and Lyft vehicles.