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Why is it much cheaper to have rental cars returned to the same place as opposed to elsewhere?

Never understood this when booking car rentals.

If I want to rent a car, and rent it from Location A, and return it to Location A, the price is significantly cheaper as opposed to having a car rented from Location A, but returned to Location B.

Why is this? I can't find anything online that would help me understand this? When I am at car rental agencies, sometimes when we are waiting on a car, they explain it is coming from another branch into the branch I am it. Then why is it so important that car rentals go back to the same place for a cheaper price?

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Note that in certain regions and times of the year for certain kind of cars (e.g. RVs) it is the other way round, because they want to get the cars back to where they want to have it because quite some people used the (more expensive) one-way option earlier. –  PlasmaHH Aug 7 at 12:03
    
There are no additionnal fee for one-way car rentals between California, Nevada and Arizona. –  Francois B. Aug 8 at 11:52
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@FrancoisB. That's not true; I just looked at rentals to pickup and return a car to LAX, and for the same dates, to pick up from LAX and return at SFO. Returning to SFO increases the price of the rental by over 100 dollars. –  LessPop_MoreFizz Aug 8 at 12:22
    
It was using a broker. The car rental company was Alamo. I travelled once from San Francisco to Fresno, and once from Las Vegas to Los Angeles with no "one-way" fee. And it was said to be the same with other car rental companies proposed by the broker. –  Francois B. Aug 8 at 12:51
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@Francois there's never a "one-way fee". The base rate itself is simply higher, in the same way a hotel doesn't charge a "weekend fee" but may charge a higher rate on weekends. (Or lower, depending on customer patterns, same as with one-way rentals.) –  LessPop_MoreFizz Aug 8 at 22:10

4 Answers 4

up vote 35 down vote accepted

So, first off, this isn't always the case. Point to point rentals can be cheaper in some circumstance. Especially if you're taking a car from an area with low demand to a return lot with high demand. You can get some great deals this way seasonally, but they're hard to shop for.

That said, the reason it's generally cheaper to return the car to where you got it is because if you don't, somebody else will generally have to. Point to point rentals are rare, so when they happen, it throws off the very carefully managed inventories of multiple rental lots. Suddenly, one lot is short a car, and another lot has a surplus. In order to rebalance things, they either need to hope somebody wants to reverse your itinerary (unlikely), incentivize somebody to do so and lose money offering them a bargain, or pay an employee to transport the vehicle.

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This really depends on the franchise, licensing and ownership in that area.

In Germany, I rented a car in Frankfurt and returned it to Munich, no extra cost (national owner, national registration).

In Calgary, I can rent a car at the airport and return it at any city location, no extra cost (same franchise).

If I rent a car in Calgary and return it to Edmonton, I pay a one-way fee as someone has to drive the car back (different franchise, same registration). They might get lucky and have a one-way renter drive it back.

If I rent a car in Calgary and return it in Toronto, the agent in Calgary simply sells the car to the Toronto location. It's cheaper than returning it. (Different franchise, regional registration. Ontario franchises cannot rent an Alberta-registered vehicle.)

I asked the counter staff why I have two keys on a steel-cable (non-separable) ring, the second key is clearly not a spare. One-way sales happen often enough that they want all the car's hardware to travel with it.

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Thanks for answering the question as to why they give you two keys to the car when only one key is needed! –  RoboKaren Aug 7 at 3:37

It spares the agency the expense of driving the car back to the original agent or otherwise managing the inventory - rental car employees spend a lot of time driving cars from one agent to the other and then someone has to drive the employe

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There is another factor, often the best deals are from small companies that just have one branch. Clearly these companies don’t offer the option of returning the car elsewhere.

So as to complete with the small companies and still make a nice margin, the large companies “over price” the add-ons that the small companies can not provide.

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