When it comes to ride-hailing, the rental car company Hertz has apparently decided if you can’t beat ‘em, join ‘em.
On Thursday, Hertz announced that it had inked deals with both Uber and Lyft to rent its older vehicles to drivers at special rates. The deals formalize and expand a pilot program that was underway with Lyft in Las Vegas and Denver. The expanded program will begin in Los Angeles, with “more markets expected to follow,” according to a Hertz company statement.
The announcement can be seen as a capitulation of sorts to the surging popularity of ride-hailing and the impact it’s had on the car rental industry.
Earlier this year, a study found that in the fourth quarter of 2015 business travelers had for the first time expensed ride-hailing more than they had car rentals. The study, conducted by Certify, an expense report specialist, found that ride-hailing had rose to make up 45 percent of the pie, while car rentals dropped to 40 percent, mirroring the decline in taxi use.
The response of rental car companies to ride-hailing has run the gamut from cooperation in the case of Enterprise, the largest such company in the world, to defiance in the case of Avis Budget, the third largest company after Hertz.
Enterprise already has a deal with Uber whereby drivers can rent its vehicles for $210 a week.
Avis, on the other hand, has downplayed any impact ride-hailing has had on its revenues. In February, Avis CEO Larry De Shon said the company would focus on improving its own app to make renting a car a more frictionless experience, and on Zipcar, which it acquired in 2013, as a more attractive alternative to its mainline car rental business.
For its part, Hertz, which has struggled with sagging revenues, characterized the deals with Uber and Lyft as “largely complementary our car rental business.”
Under the deal, Hertz would rent out Uber and Lyft drivers vehicles to being rotated out of its fleet for as little as $165 a week, which would cover insurance and mileage, according to Bloomberg.
“Utilizing cars that are rotating out of our consumer rental fleet creates a model that works for Hertz and for Uber partners by providing them with well-maintained, good condition cars,” Hertz CEO John Tague said in a statement. “We consider this agreement to be largely complementary to our car rental business, and it enables us to leverage our fleet and distribution infrastructure to participate in the dramatic growth in the ride sharing, or e–hailing, segment.”