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Is Rental Car Pricing Discriminatory?

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Moving from crisis plagued seagoing businesses to successful—one might even say revolutionary—companies on land, Zipcar (ZIP) (the best way to get out of New York City and into New Jersey if you don’t own a car and dislike trains) recently invested in the campus-bound Peer to Peer car sharing service Wheelz. Last week, Zipcar put $13.7 million into the fledgling company.

Zipcar currently serves nearly seven hundred thousand members with its fleet of nine thousand cars. However, it has experienced increased competition from companies like Wheelz, whose P2P sharing model saves them the expense of actually owning the cars they rent. The investment in Wheelz looks like Zipcar’s attempt to keep up with the continually shifting rental car landscape.

Meanwhile, anyone under the age of 25 knows how difficult (and expensive) it can be to rent a car from a traditional company. Rental car prices can vary huge amounts based on a number of factors including the age, location and, according to Frommer’s, the nationality of a renter.

Apparently, when Hal Gordon tried to rent a car from Tel Aviv for a friend’s upcoming trip to New York, Avis (CAR) told him that no cars were available. However, when Gordon told the company’s website that he lived in the UK, instead of the Middle East, it managed to find him a car.

Now, the author is quick to point out that he couldn’t duplicate the above result on any rental company’s website. However, he did manage to produce its opposite: that is, a higher price for renting a car in NYC as an American citizen than as an Israeli.

According to statements by spokesmen for Avis and Hertz (HTZ), these prices are a natural result of rental company’s dynamic pricing systems. A number of factors go into determining rental car price and, as savvy travelers know, the company’s website’s can be difficult to squeeze an actual price (after taxes and fees) out of.

Of course, there’s nothing legally wrong with this sort of pricing model. It does seem unfair to price things differently depending on the location of the renter, but fluctuations in rental car prices can benefit travelers willing to put in the effort to find the best price.

Anyways, there may be bigger things to worry about regarding the rental car industry. According to ABC News, a woman who lost her two daughters in a crash involving an Enterprise car under safety recall has launched a petition calling on the company to stop opposing a law that would take rental cars under safety recall off the road.
POSITION:  No positions in stocks mentioned.