Business is booming for Rent-a-Wreck, bargain basement for car rentals

When customers of one rental car company fly into Chicago, they skip the convenient counters and head for the pay phone. A quick call gets them their reserved car.

In the Glenview, Ill., office of the same rental company, the area manager buys used cars to increase his fleet. One of his latest finds - a '79 Oldsmobile Cutlass that he bought from a regular customer.

And in downtown Chicago, Tom Magrady talks about how things have changed since he joined the outfit. Instead of a desk job and 50 employees at Budget Rent-a-Car, he now heads a two-man operation, answers the phone, vacuums the cars, and even checks under their hoods.

It's all part of the personal service of a company called Rent-a-Wreck, which is in the business of renting used cars.

Unlike what the name implies, Rent-a-Wreck only rents undamaged, mechanically sound, used cars for about half the price at major rental companies. (In downtown Chicago, a Rent-a-Wreck used car comes for $20.95 a day and 100 free miles; $125 a week with 700 free miles. Extra mileage is 15 cents a mile.) New cars are available, too.

The concept has caught on so well that in the five years since the company began a licensing program, it has about 290 franchises across the country. About two franchises are being added each week, officials say.

''It's absolutely exploding,'' says Geoffrey Nathanson, president of the national network of the Los Angeles-based company.

While the major car rental companies cater largely to the out-of-town traveler, Rent-a-Wreck is banking on a local market. Most of its customers rent when the family-owned car is in the shop or as an alternative to owning a first or second car that is only occasionally used. Others rent while they try to decide which new car to buy, Mr. Nathanson says. ''It's not unusual to have people drive around Rent-a-Wrecks for a year or two.''

Franchises often are run by car dealers, who then can rent their used cars to customers who don't want to buy yet.

With all the growth, however, company officials admit they are hardly in the same league, or even the same business, with industry giants such as Hertz or Avis. Rent-a-Wreck competition stems instead from ''big-name'' outfits like Ugly Duckling, Hire-a-Heap, and Fender Benders Rent-a-Car.

How do people react to the idea of leasing used rental cars? ''They're a little incredulous at first,'' Rent-a-Wreck's Mr. Magrady admits. ''But the usual reaction is that it's a pretty good idea.''

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