In recent months, the limousine industry has handed Avis/WeDriveU a series of stunning defeats.  Due to regulatory inequities, administrative agencies have ruled that Avis must follow ordinances that require licenses, fees, background checks, and other regulations that apply to luxury chauffeured vehicles.  As a result, Avis/WeDriveU has pulled up stakes and abandoned operations in New York, Newark, Miami, Atlanta, Phoenix, and Houston.

Considering Avis’s strength as a fortune 500 company, this turn of events is amazing.  If inclined, Avis could have filed injunctions and dragged this through the courts for years.  So why did Avis roll over?  Most will argue the regulatory barriers created by the limo cartels were insurmountable, but the reality may be much simpler – Avis realized it couldn’t compete.

Why WeDriveU Can’t Compete

Despite national brand recognition, the Avis/WeDriveU split business model creates a serious competitive disadvantage.  By forcing the customer to rent a car from one company and a chauffeur from another, the service is inherently compromised.  As early as September 2007, Avis acknowledged the response to their new service was slow.  This is why:

Overpriced Airport Transfers – Transfers are the heart of corporate limousine work.  By placing three hour minimums on chauffeured services, they priced themselves out of the market.

Reservations must be made 24 hours in advance – This is unheard of in the corporate limousine world.  Most reservations are made ahead of time, but travel coordinators frequently place ASAP orders for busy executives.

Lack of Infrastructure – Avis may provide chauffeurs, but they don’t provide the dispatchers, QC, trainers, dedicated account executives, and proprietary technology that supports great limousine service.

Poor Customer Service – Rental car companies are notorious for their poor customer service.  If you google “Avis Customer Service,” the front page results are littered with unhappy customers.

Confusing Split Reservations – When a customer rents a car, he must first book a car and then add a chauffeur as part of a separate transaction.  This system is confusing and prone to error.

Limited Fleet – Avis has a variety of nice vehicles, but they don’t have limousines and minibuses.  This dramatically reduces Avis/WeDriveU’s ability to provide event services.

Inadequate Marketing – With the exception of a few articles in national publications, the Avis Chauffeur Drive program has been invisible.  With Avis’s recent financial problems, it’s likely WeDriveU has suffered.

It’s in the Refrigerator

The industry has positioned WeDriveU as its biggest threat in 40 years, but AVIS is a troubled company with major liquidity problems.  As the travel industry has faltered, Avis/Budget has lost money in each of the last three years and in 2008 lost $1.1 billion on revenue of $6 billion.  With continuing losses and a non-competitive product, AVIS/WeDriveU will likely throw in the towel.  It’s a competitor that can’t go the distance.