Hertz Turns AI Loose On Renters, Billing 5x More Customers For Minor Nicks And Scrapes—And It’s Spreading Fast
Hertz is installing AI inspection portals at its biggest U.S. airports this year. Atlanta was the first, but they expect to hit 100 airports before 2025 is over.
Now they scan cars as they’re being returned – vehicles drive through a camera‑and‑sensor tunnel and get an ‘MRI for vehicles’ to log damage in a way that rental staff never did before. It also finds hard to spot damage such as under the vehicle, uneven tire wear, hairline cracks in the windshield.
We’re seeing one inch scuffs on a rear wheel billed out at $440 ($250 repair cost, $125 “processing” and $65 “administrative fee”).
- That’s the kind of thing that would never have been noticed before.
- And it’s probably not actually even getting repaired.
They ask for payment right away or else you pay more, and if you challenge them it takes longer than the discount window to get a response. They go after you for more money if you question the charges.
- This isn’t about accuracy
- And it isn’t about convenience
- It’s a new way to squeeze customers who don’t expect it.
Hertz’s new system lets them go after 5 times as many customers as before. The rate at which they’re sending out bills is skyrocketing. Here’s the math:
For big U.S. airport car rental locations, between 0.3% and 1% of rentals close out with actual damage charged to the customer. Roughly one renter in every 100‑300 gets a bill for damage. The midpoint most estimate, then, is about 0.6% (or 6 claims per 1,000 rentals).
- About 10% of rental returns may have some fresh dents, scrapes, or glass chips. Most of these, historically, never turned into a customer bill. At high turnover airports the focus is on taking back the car, cleaning it and getting it to the next customer.
- Fewer than 1% of rentals historically have turned into damage claims, Meanwhile, 30% – 50% of those claims are ultimately written off.
In contrast, according to Hertz, “fewer than 3 percent of vehicles scanned by the A.I. system show any billable damage.” (Emphasis mine.)
That means Hertz’s new system is billing out damage at about 5 times the previous rate. And this destroys the value proposition of renting from them (assuming of course that there was one to start with).
Historically renting from Hertz (or Avis or National) at an airport location meant on-airport convenience and going straight to your car rather than standing in long lines, and that they didn’t nickel and dime you over minor nicks and scrapes.
You pay a ton of extra fees for airport rentals, and frequently higher rates than off-airport discounters, but you weren’t stressed or hassled. These businesses are high volume and high revenue and they didn’t hassle over minor damage the customer probably didn’t do to the vehicle themselves.
It’s always been advisable to take photos and videos of vehicles prior to renting, it usually didn’t matter when renting from major car rental companies at major airports. That’s clearly changing at Hertz and others will likely follow.
The implication, though, is that these companies will no longer be worth their premium. There was an implicit loss damage waiver being purchased even by customers not paying for extra coverage. By stripping that feature out, but charging the same price, the customer gets less and becomes incentived to book elsewere – the Fox, Payless or Advantages of the world.
