back to articles | February 07, 2024 | Vitalii Movchan

Categories: Useful Automotive Information

The History of the Global Car Rental Industry

The idea of lending cars to anyone for temporary use appeared in the United States a century ago. There are several contenders for the title of pioneer in this business.


The idea of lending cars to anyone for temporary use appeared in the United States a century ago. There are several contenders for the title of pioneer in this business. Thanks to them, anyone can easily rent the necessary vehicle for their own purposes anywhere in the world. As an alternative, car enthusiasts can consider salvage-title cars for sale at a fraction of the price. Experts believe that one of the main driving factors behind the development of the car rental service was the high demand for vehicles, which even mass production was not able to meet.

There is even a story that tells about one merchant who was catastrophically late for a date. To help him, a local mechanic provided the man with a service. Particularly, he lent his car for use, having previously bolted a simple mileage meter to the front wheel. That's how the car rental business was born.

Joe Sanders: a Person Behind the First Car Rental Business in History

The mechanic's name was Joe Sanders, and the first car he provided for rental services was a Ford Model T. The price was only 10 cents per mile, which was not much at all. With an average salary of about $50, there were so many people willing to use the service that in six months the auto fleet consisted of 18 Fords. By the way, the Model T price in 1917 was $350. That's how the entrepreneur founded the first car rental company, Sanders System, and initially worked only in Nebraska. However, the opening of small company branches in 20 states, or, to be precise, in 56 cities in the United States, soon followed due to the growing demand.

The business was developing so rapidly that Sanders could open branches all over America and earn billions of dollars, but the Great Depression of 1929–1933 hit. The promising company did not survive the drop in demand and went bankrupt.

The Development of Rental Car Services

The main American competitor and follower that Sanders faced was a young Chicago businessman named Walter Jacobs. In 1918, he opened his own car rental company, consisting of 12 Ford cars. The enterprise specialized in troubleshooting and technical inspection in the garages it owned. It took only 5 years for the businessman to earn a million dollars, which was an impressive result.

Being at the pinnacle of success in 1923, Jacobs sold the prosperous car rental enterprise to John Hertz, the owner of a transportation company. Subsequently, Hertz changed several owners, but until 1968, Walter Jacobs was the permanent president of the company. It was he who suggested placing rental offices at train stations and airports and later introduced payment for services by bank cards. Thanks to Jacobs, The Hertz Corporation still remains one of the main players in this market segment.

Speaking of Europe, the very first company was the European Sixt, opened in 1912 by a German named Martin Sixt. Initially, the company rented out exclusively German cars, but now the network covers 105 countries, with 4,500 rental locations and a giant fleet of more than 220,000 cars.

The Car Rental Services Rise

After the end of World War II, the economy and tourism began to boom, driven by a breakthrough in air travel. People were thirsty for new experiences and discoveries, which meant that the demand for the services of vehicle rental companies increased again.

Several companies appeared in the post-war wave. The largest and still-operating of them was the American Avis, founded by retired military pilot Warren Avis in 1946. He started his business at a small airport in the out-of-town town of Ypsilanti, Michigan, with only three cars at his disposal.

However, within 7 years, the company became the second largest in the United States, and its offices were in all major cities. It took only three years for the company to open its branches in both the Americas and Europe, and now it has offices in 165 countries, covering more than 5,700 rental locations.

Summing Up

The global car rental industry has undergone a remarkable journey, from local car-sharing small businesses to modern international companies. Adaptability to technological innovations and changing consumer preferences has been key to its evolution. Looking forward, the industry is set to further transform with the rise of electric vehicles. As a result, the car rental industry remains the key provider of convenient transportation solutions for different people globally.