The October issue of Fortune magazine has an in-depth report on Hertz Corp. that is must reading for every car rental operator.

The report is a must because it gives a clear insight to the Hertz success formula, tracing the development of the company from its early years to its position of dominance today. "Just about one out of every three rented ears that hit the road is owned by Hertz or one of its licensees, and not only does the company thus inundate the market, it is also the only national company that has consistently managed to make a profit on car rental." Fortune says.

According to Fortune, the key to profits at Hertz is to keep every car as busy as possible-thus achieving maximum utilization. This means, first of all, timing purchase and resale of cars throughout the country so that they aren't left lying around in garages. Second, it involves moving cars from city to city-and within a city from one rental station to another-in  order to catch peak demands as they develop. And finally, it means thinking up merchandising schemes that will create new demand at normally slack times. "In these three techniques Hertz has no peer," Fortune reports. On the average, its rental cars are on the road almost 11 hours of every day in the year."

Hertz' profitable utilization rate is tied to the purchase and resale of cars. Florida stations complete their purchasing of new models by late February, when the season is at peak, whereas Seattle stations, which do a slow winter trade but a humming summer business, do not finish purchasing new models till June. "In June, Florida is already unloading cars-ones the North can't use-at used car lots," Fortune reports.

Another factor in the Hertz success story is the art of keeping unit costs down and volume high. Hertz has a distinct advantage over its competitors simply because it is so large. According to Fortune, Hertz buys its cars from dealers at "special low fleet rates-generally only $25 more than the dealer himself pays the manufacturer and, after 12 to 18 months, depending on the state of the used car market, sells them."

AUTOMOTIVE FLEET has repeatedly stressed the importance of trading clean cars. Obviously, Hertz feels the same way. The fortune article quotes one Hertz official as saying "dealers tell us they make more on the cars they buy from us than on the ones they sell to us." According to Fortune, Hertz keeps maintenance costs low by getting rid of its cars before major repairs are necessary. While the size of Hertz commands special attention from car dealers, any fleet operator can get more for his cars if they are in good shape. Often this means spending some money on reconditioning.

All fleet operators can also profit from Hertz's experience with the used car market. Fortune reports that in late 1958, when new 1959 models were being delivered, the bottom dropped out of the used car market and the company found itself getting $200 to $300 less for its used cars than it expected. Rather than take an enormous licking on its used car sales. Hertz decided to keep its used cars until the market firmed up. To avoid a repetition of this, Hertz formulated a new policy of spreading purchases and sales over the entire year and shortened the period between the placing of new car orders and actual delivery dates.

Fortune paints a glowing picture of the car rental industry, noting that less than ¼ of 1 per cent of the 66,000,000 cars on the road are rentals and not more than 1 percent of the 94,000,000 licensed drivers have ever rented a car. With this huge untapped market, there is a bright future for companies in the rental field-if they build their business on a solid foundation.