One of the world’s largest car rental companies, Hertz, announced this week that it will launch it new service, Hertz My Car, available in Atlanta, Georgia and Austin, Texas. According to the release, there will be two tiers of membership, one beginning at $999 per month – which includes sedans, small SUVs, and trucks – and a higher level, which will cost $1,399 – for luxury sedans, regular SUVs, and large trucks. Both prices are pre-tax. Though there is a $250 sign-up fee, the subscription covers vehicle maintenance, roadside assistance, vehicle damage and limited liability protection. Drivers will receive a 2000 mile monthly allotment.
The company notes research by Cox Automotive research (online survey, sample: 1,250) that though almost 40% of respondents said access to transport is necessary to them, owning a vehicle is not. This rises to 57% among urban respondents.
“We've seen growth in our longer-term rentals in recent years which we believe is one of several positive indicators the time is right for this service,” explained Jayesh Patel, Hertz Senior Vice President, Brand.
The announcement follows rival Enterprise’s announcement in April of a similar subscription model, which includes 3000 miles but costs $1,499 per month.
Though the services appear extremely pricey, the markets reacted positively to the move, with Hertz’s stock jumping following the announcement. Both the company and investors feel that they are working toward plugging the gap left between ridesharing services such as Uber and Lyft and car-sharing programs such as BMW Drive-Now, which operates in 14 cities across Europe, or Lime’s recently-launched service in Seattle. This operates a cheaper sign-on fee and charges per minute.
The news follows closely on the heels of Mercedes-Benz’s expansion of its US luxury subscription service, which has so far yielded interesting results. “Interestingly, families and couples are equally accessing the service whether for use as their primary car, for fun or as a way to test drive a wide variety of models,” Adam Chamberlain, vice president of sales for MBUSA told TechCrunch.
It’s part of a trend that is visible across the business world, as one-off hardware sales are becoming less reliable for growth than ongoing subscriptions. A recent Manifesto Growth Architects report on membership economics, by which a subscription fee gives way to added revenue potential, showed that as many as 70% of businesses see subscriptions as the future commercial models for their sectors.
Sourced from Hertz, Cox Automotive, CNBC, Engadget, TechCrunch, WARC