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Avis Budget Group: How to Spot a Lemon

By William D Alessandro on June 02, 2011 at 2:56pm.

Content:

Avis Budget Group is the third largest car rental company in the US.  Probably.  At the moment Hertz and Avis are warring over who gets to buy out number four, Dollar Thrifty Automotive Group.

Back in 1962 Avis created an on-air and in-print advertising pitch that instantly became urban slang: “We’re only No. 2.  We try harder.”  The iconic promotion signalled that Avis was launching a frontal attack on #1 Hertz by expanding aggressively from their strongholds at airports across America.

Since then Avis has been the hot potato, bought and sold by more than a dozen investment banks and equity firms.  The succession of owners is absolutely dizzying.

The company’s name changed to Avis Budget in 2006 when its predecessor Cendant was dissolved.  The strategic move came two months before the former chairman was convicted for conspiracy to commit fraud.   Cendant was embroiled though a prior merge in what was the largest securities scandal in U.S. history until the Enron crowd eclipsed it.

The 2011 corporate responsibility report falls into the subcompact class: 12 pages plus covers.  There is a single performance graph in it.  The solitary chart shows a decline in workers’ compensation claims annually since 2003.   Otherwise, the text is interspersed with 14 photographs. 

The narrative is easy to summarise:  We are committed to providing value for our customers.  The attributes of our board of directors are unrivalled.  We are a great place to work.  We take numerous steps to minimise our environmental impacts.  We donate to charities.

Avis Budget really does not have more to say.  The company’s truck rental operation is never once mentioned.  Non-US operations are ignored.  The report does not distinguish the material environmental, social, and non-financial economic issues that may affect the leisure (Budget) or the premium commercial (Avis) segments of the vehicle rental business down the road.

Communication:

The report is written in compact, declarative sentences without embellishment.  Here is a representative sample of the content and style:

“Avis Budget Group has consistently ranked highly in analyses performed by recognized corporate governance firms.”

“Avis Budget Group employs a significant number of older people, including many retirees seeking part-time employment.”

“Avis has provided millions of dollars of free and discounted rentals to transport Make-A-Wish families.”

The few hard facts contained in the report are exceptions that prove the rule.  We hear about the company’s initiatives, but do not get enough substantive information to evaluate the efforts or to place them in any broader business context. 

The industry’s leading rival, privately owned Enterprise Holdings, does not disclose sustainability performance in a standalone report.  The one Hertz published is nothing to crow about either.  Still, there is no excuse for producing a corporate responsibility report in name only.
 
Credibility:

Independent standards and guidelines for transparency, accountability, and assurance seem to be far off the company’s map.   No one is obliged to adhere to external frameworks for disclosure, but the Avis Budget Group report is short on  legitimacy for a simpler reason.   Much of what the company chooses to say is either incomplete or distorted by omissions. 

So, for instance, the report avers:  “The Company makes allowances for leaves of absence including medical leave, family leave, military leave, jury duty leave, and personal leave.”  Whew.  That is reassuring since certain of these rights are safeguarded by law.

“Out of our total U.S. car rental fleet of more than 300,000 Avis Budget Group vehicles in the 2011 model year, more than half (63.8 percent) are rated 28 miles per gallon or better (highway) and more than 37 percent have a fuel efficiency rating of 32 miles per gallon or better (highway).”  

Could we have the fuel economy ratings for city driving, too?   Could we have the fleet average mpg?  Even more helpful, what about the actual average mpg for the company rentals?  This number undoubtedly exists since car rental  companies measure how many miles are clocked and almost exactly how much fuel is used in their vehicles.

The ISO 14001 environmental management system is used “for major airport locations in the United States.”   What should we make of that declaration?  The report fails to mention that Avis operates or licenses 5,050 locations worldwide; and 2,750 more for Budget.  

The holes keep coming, and soon the content of the report is just swallowed up by questions and doubts.  

Recommendations:

1.  Decide whom you want to benefit from reading this report and match the information in it to the needs of the audience. 
2. Demonstrate at least some familiarity with the principles of contemporary sustainability disclosures.
3. Seek professional help on points one and two.

William D’Alessandro is president of Victor House News Co., an independent agency reporting on law and the environment for trade publications and executive newsletters.  He also edits Crosslands Bulletin http://www.crosslandsbulletin.com covering strategic corporate environmental management and sustainability issues.