From the beginning of time car rentals were only available on a per day, per week, per mile basis. You rented a car and paid for the time used and the miles driven. However it was only a question of time and circumstances before car rentals would be offered with free mileage.
In 1967 my partner and I took over a bankrupt car rental company and had three rental stations, Miami, 5th Street on South Beach and the third in Ft. Lauderdale. At the time Yellow Rent A Car, owned by Yellow Cab of Miami, with rental stations in Miami and Ft. Lauderdale was offering a sub-compact car with unlimited free mileage at $45 a week. They were the first and only car rental company with free mileage but with a one week minimum rental requirement.
I can not tell you what year they first offered free mileage but I can guess why. They were only in South Florida, they were only dealing with the leisure market and Disney World 200 miles north was not open. Renters did not use a lot of miles. The competitive rate for a sub-compact car back in the 1960s was $5 per day, $25 per week [5 times the daily rental] and 5 cents per mile. With a one week minimum rental at $25 and with their weekly rate of $45 they would have the difference, or $20, to cover the cost of the miles. At 5 cents a mile the client could use up to 400 miles for the week and the rental would be a wash. I found out later that this was a winner for Yellow Rent A Car.
To my knowledge Yellow Rent A Car was the granddaddy of free mileage. Their caveat was a one week minimum. My partner and I, owners of Capital Rent A Car took it one step further. We were the first to offer unlimited free mileage one day or more. One week minimum rental did not apply. It couldn’t get any better than that and I will tell you how it evolved.
Our business was generated by advertising in local tourist magazines. We also paid a commission for referrals from hotel and motel owners, hotel doorman and cab drivers. We were just like the other 20 to 30 local car rental companies that we competed with. We needed an edge and the idea of some sort of free mileage program intrigued both of us.
Our business was with tourists and their average rental was 6 or 7 days. Looking at our completed rental agreements the average amount of miles driven in a week was about 250. If we offered a daily rate with some free miles would that fly? We thought so and we could have offered 50 free miles and that would have covered the average renter’s mileage needs. But the rate that we eventually settled on permitted us to offer more miles. More than what the average renter would use and would be perceived as a genuine bargain. The original free mileage offer included in the daily rate was 75 miles.
We were phasing out our Volkswagens, a sub-compact car, with a rate of $4 per day, 4 cents per mile. Our compact car, a Dodge Dart which would become our lead car, had a rate of $6 per day, $30 per week and 6 cents per mile. We arrived at a daily rate of $8.50 which included 75 free miles. Typically the weekly rate was 5 times the daily rate and in this example 5 times $6 the daily rate equaled $30 plus of course the mileage. With the free miles we decided that we would not offer a weekly rate. The renter paid by the day regardless if the rental was one day, 7 days or whatever.
Our business took off and why wouldn’t it. We were advertising in the local tourist magazines “free mileage.” At $8.50 per day it was a bargain and I can only guess the thoughts that our callers had. The extra $2.50 per day over the $6 per day rental charge was a bargain. They got 75 free miles so they wouldn’t have to worry about a mileage charge. Or possibly they thought $8.50 a day is cheaper than $49 a week, the recently increased rate from Yellow. Within 6 months we realized that no one drove anywhere near the break even mileage figure. So we did the next best thing. We offered unlimited free mileage. The year was 1969.
Soon thereafter we became aware of CATM. CATM is an acronym for Consolidated Air Tour Manual. A publication put together by the airlines serving Florida. It was a compilation of rates from hotels, car rental companies, attractions and other tourist support companies including tour operators. Tour operators offered “packages” which included air fare, hotel and other services such as car rentals. The theory was that if a client purchased each component of the package separately the cost would exceed the operator’s package price. By being in CATM airlines and travel agents could reserve our cars directly or through tour operators.
So we are in CATM and find ourselves competing with the big boys, Hertz, Avis and National. Not so big at the time but impressive, were Budget, Olins, maybe American International and Dollar A Day which became Dollar Rent A Car. Our $8.50 a day and a weekly rate of $59 a week [we rounded the rate out] stood by itself. Not one other car rental company offered free mileage and used the per day, per week, per mile rate schedule. Two or three years later Avis was the next car rental company to offer unlimited free mileage but with a three day minimum.
We first published in CATM in 1970 and I mention this because I previously stated that we, Capital Rent A Car, was the first to offer unlimited free mileage one day or more. To substantiate this claim I must mention that in 1942 I was in my seventh grade Shop class and the teacher claimed that he invented the airplane before the Wright brothers. I am not kidding you and maybe he did. But if he did he didn’t tell anyone so Wilbur and Orville got the credit.
Maybe we weren’t the first with unlimited free miles and maybe someone in Okemos. MI or Rockford, IL did. But if they did they didn’t tell anyone. We did by being in a national publication, CATM. So we are going to take the credit for being the first. The next time you rent a car and don’t pay for mileage you can thank us.
For those out there who wish to contest our claim please contact me at my email address below, You can also read another one of my Ezine Articles, “Start A Major Car Rental Company”, dealing with the car rental business at the resource below.