Hertz Global Holdings will aggressively pursue car-sharing customers, beginning in late summer, by equipping much of its fleet with self-service technology that will enable hourly vehicle rentals and keyless entry.
Hertz, which has operated a car-sharing division since 2008, will add in-car terminals and tablet-type devices to its fleet to enable keyless entry, possibly via smartphone, in locations such as neighborhoods, office complexes and college campuses.
Hertz announced the initiative at its annual Investor Day presentation last week.
"Technology advancements drive revenue and efficiency," Hertz CEO Mark Frissora told investors. "Increasing value with technology and speed, not through pricing, is our strategy."
The company, which will call the service Hertz 24/7, did not announce pricing but said it would offer further details in late spring.
Bob Stuart, Hertz's senior vice president of global sales and marketing, told investors at the conference, "Our exclusive on-demand technology will let you rent by the hour, by the day, by the week or by the month."
Stuart added that the company will debut a multimedia advertising campaign for the new service in the fall.
"We're going to introduce the future of car rental," he said.
Hertz shares jumped 6.8% on the day of the announcement to close at $23.41, the stock's highest closing price in more than five years.
U.S. car rental companies are eyeing car-sharing as a way to gain market share in an industry that has been undergoing aggressive consolidation in recent years.
The Hertz announcement comes about three weeks after Avis Budget Group completed its $500 million acquisition of U.S. car-sharing leader Zipcar, which has more than 760,000 members and operates in 20 cities and on more than 300 college campuses in North America and the U.K.
Underscoring the importance Avis Budget places in the future of car sharing, the company paid about 49% more than Zipcar's share price at the time of the buyout announcement late last year.
Overall, annual U.S. car rental revenue during the past five years grew 10%, to $23.6 billion, according to the trade publication Auto Rental News. U.S. car-sharing, by contrast, generates some $400 million a year, according to an Avis Budget estimate, but it's growing at a much faster clip.
The research firm Frost & Sullivan estimated in 2010 that North American car-sharing revenue would surge more than tenfold, to $3.3 billion, by 2016. And the number of North American consumers who will become members of car-sharing services was expected to more than double between 2012 and 2016, to more than 4 million.
Hertz initially went after that market by launching its Hertz on Demand car-sharing service in 2008. That product is now offered in some 200 cities and at 50 colleges in the U.S.
By offering the 24/7 service, Hertz will bring the quick-access feature of car-sharing to many more locations, making better use of its U.S. fleet of 395,000 vehicles.
The move not only takes on Avis Budget's Zipcar service but also the off-airport market largely dominated by privately held Enterprise, which last May paid an undisclosed price for car-sharing service Mint Cars On-Demand.
Enterprise then combined Mint with its existing WeCar and PhillyCarShare units to create Enterprise CarShare. Mint at the time had more than 8,000 subscribers and about 45 locations in the New York and Boston areas.
Unlike traditional car rental companies, car-sharing services recruit members who, in Zipcar's case, pay either an annual fee for more occasional use or a monthly fee for regular use, with gas and insurance inclusive.
In Los Angeles, for example, Zipcar offers either a $60 annual fee that lets drivers rent cars for as little as $8.75 an hour or $72 a day; or a $50 monthly membership fee that includes eight hours of prepaid driving plus a 10% discount on the regular rates beyond that threshold.
Members, many of whom are younger city dwellers who would rather forgo the hassle of buying, insuring, maintaining, fueling and parking a car, can make an online reservation, swipe their membership card over a car-window sensor for access and drive away.
Hertz controls about 26% of the U.S. car rental market, while Avis Budget, inclusive of Zipcar, has about a 20% share, according to Auto Rental News. Enterprise has about 49% of the U.S. market.
Follow Danny King on Twitter @dktravelweekly.