Why Rental Cars Must Rip You Off

If your revenues are at least in the seven figures, try NetSuite Next for free at https://netsuite.ai/modernmba Nobody has ever enjoyed renting a car. You land, drag your luggage onto a shuttle bus, and then stand in a line that hasn’t moved in 30 minutes while a single agent tries to upsell every customer for insurance they already have. When you finally get to the counter, the car you booked weeks ago is mysteriously unavailable. Then, after your trip, the real bill lands and it’s somehow double of what they quoted online with recovery fees, upsells, and damage penalties for dings that you never saw. It's tempting to blame it all on greed, but the experience has been like this for decades, and the truth is that it's baked into the economics. The reality is that the rental car business has always been a bad business with margins as low as airlines in good years and as thin as grocery stores in bad years. And in their best years, they make more selling cars than they do renting them. The cost-cutting, barebones service, predatory billing, and inconsistency of modern car rentals all stem from the same rotten unit economics. The industry has never had a golden age, never a period where consumers can look back on with nostalgia. And for all the talk about technology and Silicon Valley disruption, that’s never worked either. Startups like Turo, which drop the crushing debt, extreme overhead, and crippling liabilities of rental fleets in exchange for asset-light, peer-to-peer sharing all net the same tiny margins. In this Modern MBA episode, we break down the horrifying business of car rentals — from Avis and Hertz to Turo — to explain why no one has ever managed to disrupt this industry, and why no amount of technology can save a business model this rotten. ============================= Support Modern MBA - we're 100% independent, self-funded, and committed to making business education free to all. ============================= 🤳🏻 Instagram:   / modern.mba   🤳🏻 TikTok:   / modernmba   🤳🏻 Reddit:   / modernmba   ☕ Tip: https://buymeacoffee.com/modernmba