『#222: Avis – They Try Harder…』のカバーアート

#222: Avis – They Try Harder…

#222: Avis – They Try Harder…

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 Avis found a loophole for selling used cars at whatever price he wanted. This became the norm for all rental companies. Dave Young: Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor, which is, well, it's us, but we're highlighting ads we've written and produced for our clients. So here's one of those. [ECO Office Ad] Dave Young: Welcome to the Empire Builders Podcast, Dave Young, here alongside Stephen Semple. And again, breaking from tradition, if you listen to the episode just before this, which is the Hertz Rental Car, you realize that we have a spoiler. Stephen told me the topic of this podcast, gosh, a whole podcast ago. Stephen Semple: That's it. Dave Young: We talked about Hertz Rental cars, and now we're going to tell the story of Avis, number two, but they try harder. Stephen Semple: If you haven't listened to Hertz, I recommend go back and listen to it because these two stories kind of tie together. And it is interesting. We think about Avis as number two. They're not number two any longer. They're now number three. It's now Enterprise, Hertz, Avis. But that's a whole different thing. Avis is still... Look, it's a massive business. They have 5,500 locations. They do 5 billion in sales. They're a big deal. And they were founded by Warren Avis in Detroit in 1946. So just shortly after the end of World War II. Dave Young: Okay. Stephen Semple: So the war's over. Troops are returning home. Cars are now being produced for the domestic market. Because, if you remember, one of the things we talked about in the last episode was you could not sell a car domestically. All car production was going into the war effort. We've got people returning home. Roads are being built. The suburbs are the place to be. Cars are now being produced for the domestic market, and sales are exploding for cars. It's going crazy. And so Warren decides to open a Ford dealership. He sinks 10 grand of his own money in. He gets a $75,000 loan. But there's one problem with being a new car dealer at this time. The federal government puts a cap on what you can charge for a car. So there's price controls on cars. So it's actually hard to make a living selling new cars because the margin is really thin, even though lots of people want to buy it. Dave Young: If you're renting cars, you're selling them over and over and over almost. Stephen Semple: Well, you're really close. Warren finds a loophole that you can hold onto a car for six months, and then sell it as a used car, no restriction. So this is what he starts doing. However, this creates an expensive inventory problem. So it's hard to do and hard to grow because he's holding onto the cars for six months. Around this time, Warren Avis rents a car from Hertz. Now, if you remember in the Hertz episode, while Hertz did amazingly well during the war because you couldn't get a car and they had cars for rent, at the same time they couldn't replace their cars. So the cars by this time were pretty rough. Dave Young: Yeah. Oh, I bet. I mean, usually rental cars now, you don't have to have very many miles on them to have them be a little rough. Stephen Semple: And Hertz was also in what was now becoming poor locations because Hertz had located in downtown locations, and now people are moving out to the suburbs. So it was out of the way, kind of a crappy car. So Avis decides to take his new cars that he has on the lot, rent them, and then sell them as used at the six-month mark, which means he would always have new cars for rent. Dave Young: Yeah, this is the business model they're all in now. Stephen Semple: Yes.
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