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 Daily news from the Canaries and the islands' biggest English language newspaper on-line Hiring a car Country of residence matters During our recent investigation into pricing glitches at one of the world’s biggest car hire firms (see edition 579), another aspect which struck us was the extent to which where you are from can influence how much you pay for your vehicle.  But the ‘discrimination’ goes much deeper and indeed has been the subject of much criticism by consumer bodies at European level. As with airlines, car hire firms are coming under increasing pressure to put an end to the use of so-called ‘objective criteria’, whereby multinational companies set their tariffs for a car hired in Spain not according to the cost of the actual service provided but in accordance with source-market factors, including - for example - whether it is a holiday period such as half term. To illustrate the discrimination, Island Connections made a series of fake bookings over the Christmas period with leading suppliers to see to what extent the hirer’s country of residence impacted in tariffs. We posed as drivers from different countries by amending the country of origin box on the initial booking screen and tried to book the same car with the same firm to see the outcome. The results make interesting reading, to say the least. With Europcar, a Kia Picanto at Madrid Airport for the period 26 December 2008 to 4 January 2009 cost 305.68 euros for a driver giving their country as Ireland and, for some reason, no pre-payment discount was available. The same car for a UK driver cost 256.32 euros, but a pre-paid option was available at just 205 euros, i.e. a whole 100 euros less than the price charged to someone from Ireland for the same car. A Finn would have paid even less, at 169.34 euros pre-paid and 219.55 on the day, but Spain-based drivers would have had to fork out 273.95 euros in advance and -bizarrely- only slightly more (285.01) on the day. With Avis, an Opel Corsa 1.2 at Madrid Airport for the same period was offered at 306.15 euros for those living in Spain, compared to 212.26 for those residing in Germany and Ireland and just 191.50 euros (167.79GBP) for drivers from the UK. It is worth noting, however, that unlike the Europcar site, here no information was requested on nationality/country of residence. The prices were obtained from the respective national Avis websites, so presumably the trick would be for those in Spain to access the booking system via the UK site in order to benefit from the much lower rate. Drivers from Spain would have been better off booking with Hertz for the same period at Madrid airport: a Peugeot 107 or similar was available at 210.11 euros (179.96 GBP), whereas British customers would have had to pay 209.37 GBP for UK resident, an increase of 16 per cent. Had our hypothetical booker been renting at Tenerife South instead of Madrid for the same period, it would again have paid to be Spanish with Hertz, given that a saving of 13 per cent would have been made on a Ford Focus. The lowest rate offered to Spaniards was 288.87 euros, compared to 327.43 euros to UK residents. Residence in Spain would not have been an advantage for a short hire in Madrid, however. Britons would have been much better off than their Spanish counterparts if they had taken a small car such as a Peugeot 107 for two days, saving 28 per cent in the process (65.47 vs 82.96 euros). As can be seen, there appears to be no logic to the pricing systems operated and, as many frequent users have pointed out on forums, it can often be to your advantage to give a different country of residence when making your booking on-line and hope that the discrepancy is not spotted. But be warned: the ‘trick’ is very familiar to the car hire companies, who are at pains to point out that lying when giving personal details is a breach of contract and can, among other things, render the insurance cover invalid, leaving the hirer with a heavy bill if something goes wrong. Why is it done? Hertz, whom we took the matter to, explained that source-market pricing is standard practice in the industry. Nuns Moodliar, Hertz’s Vice-President for Corporate and Legal Affairs, pointed out that “in some source markets the costs (e.g. marketing and website development) are higher than in others and the pricing reflects those costs operating in the source market”. He illustrates his point with the following example. “Take two people who book a car with us in Malaga Airport. One is from the UK and one from Germany. In Britain it is a holiday period but not in Germany. Our marketing costs in Britain are higher because we would probably be specifically promoting rentals in the UK around then and the tariffs offered to British customers reflect that extra cost. Bear in mind the cost at the actual point of rental is just one element of the overall cost. As a multinational, we market in the source market even though the car is picked up at the destination”. Moodliar is at pains to stress that “it can cut both ways” and a given nationality is not always penalised. The controversy is far from new. Back in November 2005, a report drawn up by the European Consumer Centres Network entitled Car Rental Contracts: An analysis of European cross-border complaints and consumer protection found that “it has been proven that when consumers make Internet reservations for a particular service, the price they are quoted may vary depending on the country of residence they give. Considering the general prohibition of discrimination stipulated by Article 12 of the Treaty establishing the European Community, these practices fall under the scope of article 47 of the proposal on services, which prohibits any discriminatory provisions relating to the nationality or place of residence of the recipient of the service”. It appears that extensive discussions have taken place with the European Commission in the context of the Services Directive but for the moment there is no sign of a change in the current practice. Until it does change, it pays to shop around, since although you may be penalised by one company for being from the UK or Ireland, it might be to your benefit when you hire through another. By Karl McLaughlin
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