Is the car rental business an attractive field for a businessman to enter? If so, why?
To get the answer to these questions, AUTOMOTIVE FLEET sought out a newcomer in the rent-a-car business, Howard Leopold, of Des Moines, Ia. Leopold has been the National Car Rental System licensee in Des Moines for the past 19 months.
"I think the car rental business is damn attractive," Leopold said. "It has all the growth potential a businessman could want, especially in a smaller town. Why, we're just getting our feet wet here."
To Leopold, entering the car rental business was a natural. He has been in the parking lot business in Des Moines for the past 25 years and he decided to get into the business upon realizing how many people parking in his lots were using rented cars.
"I figured that I could cash in on some of the profits myself," Leopold explained.
Leopold started out with eight cars. He now has 23 cars and soon hopes to expand his fleet to 30. Most of his cars are Chevrolet Impalas and Ford Galaxies. He has four rent-a-car locations-one at the airport, one at each of two hotels where he has parking garages and one at his largest parking lot. He operates four other parking lots that are not tied-in with car renting.
According to Leopold, it took $10,000 to enter the car rental business. While this may seem like a small amount, it should be remembered that he had ready-made locations, and, being an established businessman, available credit from banks.
Leopold says that he trys to gross $250 per month on each of the cars in his operation. Thus far, he said, he has had no difficulty reaching this goal and may even push the gross figure higher. Cars are traded every 18 months or 20,000 miles.
Because of the rapid turnover of cars, Leopold doesn't experience many maintenance difficulties. Spark plugs are changed every 10,000 miles when the cars are tuned. Both batteries and tires last the life of the car. Snow tires are used during winter months. Seat belts are standard on all cars.
Leopold said he didn't experience much difficulty in launching his business. A major reason for this, according to Leopold, was the help supplied by National Car representatives. National Car gave Leopold market research and sales promotion help, advised him on specific service problems and assisted in overall operations.
Like most rental operators, Leopold feels that an airport location is a must.
"We just got into the Des Moines airport and already we can see the results," Leopold said. "This is where we expect to get more than half of our business."
Would Leopold recommend the rent-a-car business to a young man just starting out?
"Most certainly I would, Leopold said. "The car renting business is just beginning to grow. It's ideal for a young man starting out. That is, if he has the ambition to work hard."
Another newcomer to the car renting field, John Barber of Michinana Wheels, South Bend (Ind.), also thinks that the renting business is "very lucrative."
Barber has been in business as the Avis licensee in South Bend since last July. He also operates the oldest and one of the largest used car lots in South Bend.
Barber told AUTOMOTIVE FLEET that he decided to enter the car rental field because he was looking for another business venture related to cars and decided that vehicle renting represented the greatest growth potential. He estimated his initial capital investment at between $95,000 and $100,000.
Michinana Wheels currently operates 24 cars out of one location in South Bend. Barber hopes to expand his fleet in the "near future" to keep up with increased business. He also hopes to soon be operating out of the South Bend airport.
According to Barber, approximately 85 per cent of his volume comes from businessmen traveling in and out of South Bend. Sales offices are maintained in several smaller cities surrounding South Bend.
Barber said he plans to trade his cars every six months. By doing this, he said, he expects that it will reduce the over-all cost of operation.
"Maintenance costs will be held to a minimum," he explained. "In fact, the extended warranty periods offered by the manufacturers will reduce maintenance and repair costs to a near zero if we trade every six months."
Barber said he is averaging $275 of rentals on each of his cars. He would like to bring this up to $300 per month. Avis, he said, gave him "all the help I needed" in launching his operation.
"I still call upon them for advice," he said. "Then-assistance has been invaluable."
The only specific problem that Barber encountered in starting his business-and it is not limited to the car rental business-is lack of capital.
"I wish I had enough funds to purchase 100 cars," he explained. "There is real profitability in the car rental business."
Judging from the experience of other car rental operators, it won't be long until Barber has the funds to purchase his 100 cars.