The Voice of the American Auto Rental Industry
Dedicated to the betterment of the rental car industry by supporting and promoting sensible legislation that will benefit all its members.

Reno Airport Proposed Car Rental Tax Increase

The American Car Rental Association strongly opposes any attempt to increase the car rental tax in Washoe County. Increasing the car rental tax an additional 2% would be kicking our customers while they are already down. Under the proposal, a $30/day car rental at the Reno airport would result in $12.58 in taxes and fees – more than 41% of the daily rate! This would solidify Reno as one of the highest taxed locations in the country for car rental.

We support the position of the Reno Airport Authority that recently stated, “..a step to further increase the tax burden on rental car customers is not as pain-free a solution as often represented.” As these taxes accumulate and rental car costs rise, the auto and travel industries are increasingly being harmed. Discriminatory taxes make it costlier to travel, suppressing demand for rental cars, hotels, resorts, airlines and other therefore, suppresses ancillary spending by those visiting our area. It’s simple economics.

Additionally, our industry opposed the original car rental tax for the stadium because there is absolutely no correlation between renting a car and attending an Aces game. Therefore, our customers receive no disproportionate benefit from paying the tax. So, the tax clearly fails the “fairness” test. Raising the tax only serves to exacerbate this patent unfairness. Furthermore, why should car rental customers continue to subsidize the debt of another private industry? Once again the airport asked a very appropriate question, “While a tax increase may address the immediate City financial issue associated with the Aces Ballpark development, the question is should it be solved by rental car customers.”

ACRA Statement on Draft Recall Legislation

The American Car Rental Association and all of its member companies (Includes all the major entities as well as numerous independents and franchisees nationwide) are in full agreement with the proposed legislation that endorses safety requirements for car rental companies. This is an easy proposal to support as it sets into law what our member companies have been doing voluntarily for some time.

The American Car Rental Association represents the entire car rental industry not just the 93 percent of the rental car market that is comprised of the four major rental car companies, who have agreed to endorse this legislation. We have been fully involved in every meeting, teleconference, and communication working with all the stakeholders to codify the standards in addressing recalled vehicles in order to have a uniform standard which provides greater confidence to our customers.

The legislation we are supporting prohibits the rental of any vehicle subject to a safety recall notice, including vehicles rented from car sharing services. ACRA’s endorsed bill would also prohibit car rental companies from selling used vehicles subject to an open recall. Since there’s no similar law governing any other used car sellers, this will hold our industry to an even higher standard than all other used car sellers and hopefully set the standard for other for hire transportation services.

This proposal represents a responsible approach that reflects a great deal of thoughtful analysis and negotiation which focused on practical implementation issues and we fully support this recall legislation.

Facts About Auto Safety Recalls and Rental Cars

Introduction

There are 1.6 million rental vehicles, including car-sharing in service in the United States. Our industry has a long history of providing safe vehicles for our customers. Nowhere is this more apparant than in our timely and comprehensive procedures for dealing with recalls. Our commitment to safety has led our members to adopt far more conservative standards for recalls than what the law requires or what is recommended by the auto manufacturers, as overseen by the National Highway Traffic Safety Administration (NHTSA). Current data confirm that the manner in which our industry handles recall notices is working well. The reality is, the rental car industry addresses the repair of recalled vehicles at a rate demonstrably superior to any other class of vehicle owner.

Current Industry Practices

Prompted by the unprecedented Toyota recalls of early 2010 affecting tens of thousands of rental vehicles, the industry, through ACRA, publically stated its strict adherence to the following practices:

  • When we receive a recall notice from a manufacturer, we will not re-rent that vehicle until all repairs are completed. If a member makes an exception, it would only be when they are satisfied that the vehicle is safe to operate under the circumstances presented by the particular recall and based on information and direction provided by the manufacturer. In all cases our policy is to have the recommended work done as quickly as possible.
  • Further, when manufacturers direct that a recalled vehicle not be driven because of the severity of the safety issue, we stop renting such models and immediately contact customers already in those vehicles to provide them a replacement as quickly as possible.
  • All decisions the car rental industry makes concerning the “roadworthiness” of any vehicle are based upon information and direction provided by the auto manufacturers. Our processes have continuously evolved to improve the timeliness of recall repairs, and consequently, an overwhelming percentage of vehicles are now repaired and returned to service within the first month.

The question of regulation

The public debate regarding the need for regulation of our industry stems from two issues:

  • Almost seven years ago, two California sisters died in a terrible and tragic crash involving a rented PT Cruiser, which was subject to an open recall notice. The rental company accepted responsibility for the accident, and today that 2004 PT Cruiser would not be rented until it was repaired.
  • Data recently obtained from the auto manufacturers and posted by NHTSA have painted an incomplete and outdated picture about our industry’s performance regarding recall repairs. The information contained old, inaccurate (as acknowledged by the manufacturers) and irrelevant data rather than the industry’s current repair rates.

Proponents of regulating the rental car industry’s management of safety recalls cite a need to “close a rental car loophole.” In fact, there is no such loophole. Rental car companies are not treated differently under the law vs. all other vehicle owners and fleet operators. What is different, is the industry’s focus on safety which has resulted in billions of rentals over 10′s of billion of miles since 2004 without a single recall related incident.

Still, we stand ready to work with any government agency or legislative body to achieve improved recall completion rates for all vehicles on the roadways. We believe transparency and accurate information is the key to an effective process. For this reason we have made internal data available to regulators and legislators, and have committed in every forum of debate to support legislation which would mandate our ongoing reporting of recall completion data to NHTSA, who has the expertise to evaluate such data to determine whether the need exists for further regulation.

Florida Supreme Court Rules Insurer Must Pay for Rental Car Crash

The Florida Supreme Court’s ruling on Nov. 23 overturned a district court’s findings on a case that involved a rental car crash in which the original renter wasn’t driving at the time of the accident.

Read about the case on Auto Rental News.

Graves Law Denied Review by Supreme Court

In an announcement Nov. 28, the U.S. Supreme Court denied review of Graves Law, which had been challenged by the Association for the American Justice (AAJ) in September. Graves Law prohibits states from imposing vicarious liability onto non-negligent rental and leasing companies.

Read more about the action at Auto Rental News.

Car Rental Show 2012

ACRA invites you to attend the Car Rental Show March 12-13, 2012, in Las Vegas. The Car Rental show is the industry’s meeting of independent and franchised rental company operators, manufacturers, and industry professionals. See the speaker and session lineup here.

For more information and registration, visit CarRentalShow.com.

ACRA Legislative Update

With the holiday season right around the corner…that also means that state legislators will be heading back to their respective Capitols very soon. Most states convene in early January and work through May or June. There are a handful of states that are in and out of sessions throughout the calendar year, but those are the rare exceptions. Typically by June of each year we have a good sense of how poorly or well our industry has fared in the legislative arena. The past few years have been productive for the rental car industry as we have shared on these pages before. The industry scored a number of key successes and we hope to build on those as we look forward to 2012. Below are just a few examples of issues on which the American Car Rental Association will be working on behalf of its membership.

RECALLS

The California legislation (AB 753) is currently stalled in the legislature, but we anticipate it will come back when legislators reconvene in Sacramento. Through the efforts of several ACRA members, the legislation is drastically different than the original version, which would severely disrupt operations, the industry is still opposing the bill. The legislation has already passed the Assembly and is pending in the Senate, which we anticipate will take action next year. Given the safety track record of our industry and recognizing that our practices and decisions are based upon keeping the safety of our customers paramount, the legislation, in our opinion, is completely unnecessary.

At the federal level, the legislation introduced by Sen. Chuck Schumer (D-NY) and others would impose unprecedented regulations on car rental companies and used car dealers – even more so than the California legislation. As in California, we believe our industry is being unfairly singled out for unnecessary, burdensome regulations. The bill is currently in the Senate Commerce Committee, which could take action on the legislation in early December.

ACRA position on recalls is posted on its website. Many members are signing on to underscore our industry’s solid commitment to safety and to repairing our vehicles in a timely manner.

TAXES

Our industry continues to be a target of state and local governments’ efforts to add or raise excise taxes on our customers in order to deal with budget shortfalls or pay civic projects such as sports stadiums. ACRA successfully fought a number of these taxes last year, but we anticipate several more to come this upcoming year. In Minnesota, the funding question for the a Vikings stadium has not been resolved and rental car taxes have been mentioned there. There will be others.

ACRA is pursuing a federal solution to this local tax problem. H.R. 2469 was introduced by Rep. Steve Cohen (D-TN) and Rep. Sam Graves (R-MO), along with other co-sponsors of both parties. This bill would prohibit future discriminatory taxes imposed upon car rental customers by state and local governments. The principles of the legislation are similar to other federal laws that protect the railroad, airline, commercial bus and commercial trucking industries from state and local discriminatory taxes. The bill has been referred to the House Judiciary Committee and we anticipate a hearing early in 2012.

PRIMARY LIABILITY

ACRA will once again engage legislators in Arizona, Maryland and New York to pass legislation that will re-order the priority of payment of third party claims. Currently the rental company is first in line to pay such claims. As we reported earlier, the industry undertook efforts last year to change the law in this area and came up a bit short. The insurance lobby weighed in heavily against the legislation, which led to its ultimate defeat. But, we believe with continued education of lawmakers, we can ultimately prevail on the issue. The fact remains that these states are in the severe minority of states that require the rental company to pay out first, if there is other valid insurance from the renter available.

FAILURE TO RETURN

In Florida, there are conflicting and confusing statutes governing when a rental car company can report a vehicle stolen and when law enforcement adds those vehicles to the “Hot Sheet”. Adding to the confusion is that there are some local jurisdictions that create additional conditions that rental companies must meet before law enforcement will consider a vehicle stolen. This takes time – and the more time it takes for a vehicle to be put on the Hot Sheet, the less likely we are to recover our vehicles. There will likely be ACRA-supported legislation in Florida to modify the law to create one statewide standard of when law enforcement should consider a rental vehicle stolen.

MINI TORT REFORM

In Michigan, there is an effort underway to re-examine the state’s mini tort system. Among other changes, some are wondering whether the current system results in a particular injustice to those involved in auto accidents that are not at fault. Michigan is one of the few “no-fault” states remaining in the country. That said, there is at least some accounting for fault in the state mini-tort provisions, which serve as a vehicle for the injured party to recover the amount of a deductible from the wrongdoer. Such a provision is necessary because both parties to an accident file claims with their own respective carriers in a “no fault” scheme. Because of the way the current statute is written, the injured party is not entitled to loss of use – only deductible reimbursement. Some believe that amending the law to allow for loss of use compensation and deductible reimbursement is only fair given society’s reliance upon the automobile. Never mind the fact that the auto capital of the world doesn’t recognize this basic right that is taken for granted in other states, the fact is that it may be time, and if the rental car industry could stand to put a few more cars on the road as a result, we should consider participating in the policy debate.

LOSS OF USE

In Wisconsin, the Wisconsin Car Rental Alliance “WICRA” is considering a reform of the statutory rules that govern the circumstances under which a rental car company may be entitled to “loss of use” from a renter who damages a car while on rent. WICRA may seek to pass a bill with language similar to the following:

“In addition to the customer’s responsibility for damage to the vehicle (as defined in the state statute) the renter is also responsible for loss of use. Loss of use shall be the total labor hours (body, paint and mechanical) from the repair estimate divided by 4 hours to determine the number of days out of service. The days are then multiplied by the daily rental rate on the customer’s rental agreement excluding any optional products or accessories.”

American Car Rental Association Rental Car Recall Statement

Our members conduct more than 80% of all U.S. rental car transactions, and share an unwavering commitment to provide safe, well-maintained vehicles to their customers. The scale of auto recalls has grown exponentially over the decades, prompting the industry to improve its focus and procedures for dealing with recalls.

Specifically, we have recommended that our members apply a far more conservative standard than what the law requires or what is recommended by the auto manufacturers, as overseen by the National Highway Traffic Safety Administration (NHTSA). On behalf of our member companies, the American Car Rental Association (ACRA) has collected the best policies, practices, and procedures of our member companies and developed a Rental Car Recall Statement.

  • When a member receives a safety recall notice from a manufacturer, they should not re-rent that vehicle until all repairs are completed. The only exception is when they are satisfied that the vehicle is safe to operate under the circumstances presented by the particular recall notice and/or after consulting with the auto manufacturer about the safety of the vehicle. In all cases, our member’s policy is to have the recommended work done as quickly as possible.
  • Further, when manufacturers direct that a recalled vehicle not be driven because of the severity of the safety issue, the members should stop renting such models and take steps to immediately contact customers already in those vehicles to provide them a replacement as quickly as possible. All vehicles falling under these criteria shall be grounded until such recall is completed.
  • All decisions our members make concerning the “roadworthiness” of any vehicle always should be based upon information and direction provided by the manufacturer of the vehicle in question.
  • Members shall track recall completion rates at the 30-,60-,90-, and 120-day mark and make available to NHTSA annually on a collective basis their completion rates. Furthermore, members shall make available to NHTSA the same information on company-by-company basis for any individual recall when NHTSA so requests including information on staged recalls or parts delays.
  • Members shall work with NHTSA and the automobile manufacturers to improve the recall system. ACRA hopes that the industry’s experience in purchasing more than 12 percent of the new passenger vehicles sold in the U.S. can provide valuable insight for the benefit of all vehicle owners.

This statement is intended to capture and consolidate the many diligent and responsible recall practices ACRA’s members currently follow to ensure that their rental cars comprise the safest fleet on the road today. Furthermore, ACRA’s members believe their public statement serves to further clarify their level of commitment and ensures that this level of diligence is documented and maintained in the future.