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Tess Vigeland: Profit margins for rental car companies these days are about as narrow as the shoulder on a back-country road. Hertz is really hurting. Its year-over-year profits in the latest quarter were down 92 percent. Which may help explain why the company is looking at a novel way of pinching pennies.
Bloomberg News reports that Hertz is testing a new high-resolution photography system. It would scan cars for dents and dings before and after a rental. No more circling the car with a diagram and crossing your fingers that you don’t miss something. Here’s our senior business correspondent Bob Moon.
BOB MOON: I rent cars all the time. And I can tell you, be prepared for some companies to inspect every last inch when you return your car — as intensely as if they were trying to decipher the fine print in their contract.
In fact, industry consultant Neil Abrams says the standard car-rental contract almost always holds you responsible for all damage.
NEIL ABRAMS: It doesn’t speak to minor damage or major damage, it speaks to damage to the vehicle. You bring the vehicle back in the same condition you took it. That is the customer’s responsibility.
Some customers have taken to snapping pictures of existing damage with their cell phones. Hertz spokesman Richard Broome says the company is essentially experimenting with doing the same thing, with a very sharp image.
RICHARD BROOME: This technology, if it pans out for us, eliminates waits for customers on the front end of the rental. And we have a clear and accurate picture of the state of the car — its dings and dents, scrapes and scratches, before it leaves the lot And then we repeat the process at the end of the rental, so that we have an accurate record of before and after.
Paul Linnee is a frequent traveler from Minneapolis. We caught up with him today on a business trip to Las Vegas and as someone who rents cars a lot, he likes the idea.
PAUL LINNEE: You know, it’s always subjective. They say there’s nicks on the door. Well, yeah, there are. But what if I put more nicks on the door? Who’s to assess which nicks were there first? So the idea of photographic evidence, I think, would have a good potential of avoiding conflicts down the road.
Hertz told us today the vast majority of renters are careful to take good care of their cars, and the company isn’t looking to charge for every tiny scratch. But consultant Neil Abrams says they almost can’t afford not to. Consider the take on the average rental contract is 20 bucks.
ABRAMS: If they have to repair a scratch or a ding, chances are it’s going to cost you more than $20. You’ve given away the profit if you don’t collect on that damage.
And you guessed it: That ultimately means even careful customers get dinged with higher rates.
I’m Bob Moon for Marketplace.
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