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History of the Rental Car

happy man inside car

The rental car industry had its beginnings closely tied to Ford's introduction of the economical Model T in 1908. In 1916, a Nebraskan named Joe Saunders was supposedly the first person to start a rent-a-car business when he lent out his Model T to traveling salesmen. (Mr. Saunders' first customer is said to have been a salesman needing transportation for a date with a local girl.)

In September of 1918 in Chicago, Walter L. Jacobs, then only 22 years old, opened a car rental business. He began with about a dozen Model T Fords, repairing the cars himself, and by 1923 his car rental business was generating $1 million in annual revenues. The Yellow Cab and Yellow Truck and Coach Manufacturing Company, owned by John Hertz, acquired Jacobs' business. General Motors then bought out Hertz's Yellow Truck Company in 1926. The car-rental business became known as the Hertz Driv-Ur-Self System.

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In these earliest years, rental car companies became associated with criminal activity, especially during Prohibition. Many believed that cars were often used by bootleggers, bank robbers and prostitutes. After the 18th Amendment was repealed in 1933, the industry was able to regain a respectable reputation, and the business grew.

In reaction to the growth of private ownership of automobiles, a number of railroads created Railway Extensions, Inc. In addition to car rental franchises, the group endeavored to encourage car rentals use by allocating space for rental booths at railroad stations, as well as subsidizing telegraph service for passengers to reserve cars at one station and pick them up at their destination. Of special interest is the fact that the railroads paid for advertising for the car rental dealerships at their stations. Railway Extensions, Inc. geographically spanned stations from Chicago to New Orleans. East of Chicago, the Hertz-controlled America Driv-Ur-Self negotiated a less substantial package that did not include free telegraph service or advertising or space for rental booths at railroad stations.

After the second World War, the car rental industry grew rapidly. This growth was linked closely with the boom in the airline industry. One of the most important steps in this growth was when Hertz developed the "fly-drive" car rental concept by opening franchises at airports in Atlanta and Milwaukee. Avis, another company, which was started by an Army pilot, centered almost all of its operations from airports and aggressively advertised services through the airlines themselves. The industry has been extremely competitive since the 1960s, when price wars and the success of small name renting companies forced prices down. It is an industry still closely linked with airline transportation.

So that's how it all started. What can you say? Share us your thoughts.