#32 - Monday Minute - Rental Car Rant

Hey, if you guys are surprised to see the independent dealer podcast in your lineup on a Monday morning, don't be. We are going to try to do a little Monday rant for you, a little Monday minute at least every Monday, just to talk about some of the hot topics that are going on out there in the forums and give you guys our take.

Guys and gals, we were a topic of conversation came up the Facebook group the other day about rental cars and rental car companies. And there's all kind of different opinions out there, in my opinion, as y' all can see, is it's a horrible business. And I know that's. That's just my opinion and it's my experience, but it's bad. Just think of the worst buy here, pay here customer you've ever had and multiply that by the amount of cars you have and that will give you an idea of where you are. That's my opinion.

Luke, let's qualify this. What kind of rental business were you running and what did you do? Why did it go? Why are you sour?

Okay, so I'm sour because we're running a cash only business. And so, so, I don't know, show.

Up with just cash and a driver's license or no driver's license.

You got to have a driver's license.

Okay, driver's license, cash. I take the car and I just pay you 20 bucks a day until I decide to bring it back.

Sure. And it might be 60 bucks a day, you know, whatever it is, but the way my state laws are. And let's back up. So you come in and you, you really fill out a credit application, but it's not necessarily a credit application. And we check your driver's license to make sure you don't, you know, you don't have any bad. You don't have any DUIs, you don't have any bad driving records or, you know, there are certain qualifications. It's not just here, the keys, the car, give me your money and off you go. Yeah, that's not what it is. But what does happen is this. You've got a little old lady from Pasadena who shows up and she rents a car, right? Yeah. This is a great rental. Well, next thing you know, her cousin's driving the car or her niece is driving the car, or the grandson's driving the car, and the cars total or ends up at the bottom of a lake that doesn't get found for three years. That happened, actually. So this is what we're having happen what we had happen. We are officially out of the rental car business. A couple things. Before you. Before you even venture down the road of getting into the rental car business, you got to know your state laws. And this is what I mean. In South Carolina, whoever owns the vehicle is responsible for the liability coverage of that car. So what does that mean, Jeff? You know, Mm.

You're on the hook if they smash into a school bus full of kids.

Exactly. You are on the hook if they kill someone. If they. Let's say it's not even bad. Okay? Let's say that a customer, which happened to us, is backing their car up in a parking lot, and they just touch the back end of another car, and that other car happened to have six people in it. Well, guess what happens. Every six of those customers in that car gets an attorney. So you get six. You get served with six lawsuits there. Then the person that was driving your car had four people in their car or three people in your car in your rental car, and they all go to the hospital as well and retain attorneys. So now from one little small accident in a parking lot, you've got 10 lawsuits. That's what happens. That's what can happen.

Well, I think even just from driving down your streets here, like every billboard is, hey, got into an accident.

Exactly.

There's a lawyer for every single car accident here.

And every time you turn on the tv, it's all attorney commercials. There's more attorney commercials than there is car dealer commercials. That's pretty bad, huh?

So when you say lawsuit, they came after your rental car insurance. Right. You had these rental cars held in a separate llc. I assume they weren't in your name, so they went after whoever your liability insurance was. Right. So, I mean.

Yeah.

What was the.

Luke's exposure, though?

So.

Yes. So that was the argument that so many people had on this. On this thread. The argument was, well, who cares? They're not suing you. Right. Well, they are. The lawsuit is filed against Godwin Car Reynolds, Inc. Not against Luke Godwin's Hartford policy. This, that, and other. It is filed against you. They have to retain an attorney for you. It goes on to your insurance record, whatever that is, your insurance credit. So every time you want to go get insurance for something else, I guarantee it affects your insurance cost. So, yeah, you're not, you know, you're not getting sued personally, and there's not a lot of liability. Now, there might be if you. If one of your rental customers kills someone. It might be, but there's still. There's still a lot of liability and a lot of exposure that people don't think about. It's. It's just a. It's a business, I think, better left to Enterprise and to Hertz and to people like that. And I think. I think, Marshall, y'. All. Y' all spend a lot of time and energy going down this path. Can you talk about that and what you found out? This is in Oregon.

Yeah. Yeah. I mean, we were approached by a guy who worked for Enterprise for 30 years. And he. Or maybe it was 25 years, doesn't matter. It was a long time. And he had a non compete with them that expired. And so he came to us and said, hey, I think you guys could be in the rental car business. And I know how to do it all. And that was intriguing to us. So we brought him on staff part time to say, let's figure this out. We spent four times four months just kind of in the investigative stage and go, hey, is this worth it to us? And really what we came to the conclusion of, with all the things that we've got in the air, that we do other things really well, and we would just be okay at that. And there were some other liabilities, some things that you talk about that we discovered in our state that concerned us. But I think more importantly, we just said, what do we do well and what are we known for? We're really good at car sales and we're getting really good at car service. Why don't we stay in our lane? And if we want to expand, we're going to expand to another car sales car service world, which is what we did. And we just chose to kibosh that other. The car rental.

That's. That's interesting. And the one thing that I really started to feel might be getting damaged is my brand. You know, if you have a bunch of rental cars out there that are running into people or this, that and other, and you're getting sued and the clientele it kind of brings with it. I was really starting to worry about a damage to Goblin Motors. And so that. That's definitely something that you have to look at.

Yeah. I mean, how much time do you want to invest in that? And so if you don't, not only from, you know, talking about damaging your brand from cars damaging it, but the person running the operation could damage your brand, you know, if their customer service is poor and just the way they treat their customers, which was a little concern, I mean, this guy was great. But unless I'm there or, you know, somebody in our senior management staff's there, that's closely monitoring that person. We don't know how he's interact with them. So we go, that's a lot of investment. Do we, again, want to take that or put it where we know we can make money?

Yeah. And let me preface this. I know a lot of people who've made a lot of money in the rental car business. And so can it be done? Sure, it can be done. If your state's laws are better than South Carolina state laws, then I would say that might be something you want to look at. But do your homework. Like we talk about anything. Do your freaking homework. People don't get on Facebook and ask whether it's a good idea, because it may be a good idea in your area, in your state, but it also may not be a good idea. So let's do our homework.

Do either of you guys have loaner cars? Because I have three, quote unquote rentals, but I only use them for service as loaner cars or courtesy cars. You guys, either of you do that?

We do not. We started partnering with Enterprise. They give us a rate, a special rate, and we just didn't want the liability. We had one, you know, it was always needing repairs sometime at the most inconvenient time, and either repairs and then if it broke down on somebody, you know, that's our responsibility. We just said, you know what? I'd rather eat the, you know, the $30 or whatever it is per day that we partnered with in Enterprise or whomever is on the hook for that, you know, not us.

So right now, Jeff, I have a couple rental cars because I think my rent rental car insurance is still good until September 30th. So I've kept a couple loaner cars in the rental fleet. It ends October 1st, so I don't know what I'm gonna do there yet, but there's a piece of me that really wants to go up to Enterprise, which is right up the street there, and say, hey, what can you do for my customers? What can I do to get this help? Because taking that liability would make me sleep better.

Awesome.

Better customer service sometimes, too. Oh, sure.

Enterprise.

That's for sure.

Yeah, I'm definitely. I don't have a 2018 Hyundai Sonata in my loaner fleet. That's for sure. It's a 04 PT Cruiser.

Oh, gosh. I wouldn't even get in that thing, Jeff.

I just. I don't. I don't want them to enjoy the loaner car more than they enjoy their actual car.

So forget about that at all.

That's not gonna happen.

Exactly. They're anxious to get back into their own car.

So that was my rant of the week. Yeah.

Awesome, Luke. I like it. You guys stay tuned for the episode coming up on Thursday. It's gonna be awesome.

All right, buddy.