Eastern Europe -- With Rental Cars, A New `Curtain' Has Been Raised

FRANKFURT, Germany - After the Berlin Wall and the Iron Curtain fell in November 1989, major car rental companies rushed to cash in on eastern Europ's newfound freedom of travel.

I was among those travelers eager to explore the former East Bloc. In July 1990, I embarked on an East Europe reporting assignment by picking up a new 5-speed Volkswagen Golf from Hertz at Frankfurt airport. For four weeks, my Golf carried me comfortably over thousands of kilometers of potholed roads in East Germay, Czechoslovakia and Hungary - for a rental cost of only $690.

But the days of cheap and easy rental car travel from western Europe into eastern Europe are over, as I learned while organizing a vacation that took me and my family from Germany to Hungary recently.

A new "curtain"

Burned by an epidemic of auto thefts in the old Soviet bloc, major car rental firms have erected a new Iron Curtain of sorts: With few exceptions, they simply won't rent you a car in western Europe if you plan to drive into a formerly communist country.

"We put on the rental agreement, which is the contract the renter signs between Avis and himself, listings of countries where Avis tells you they are forbidding you to drive their car," said spokeswoman Marianna Field Hoppin.

"Should you choose to ignore their mandate, then all of your insurance are immediately cancelled. The net effect is, if you were to drive you car over from Berlin to Warsaw and you parked it and it was stolen, you would, in effect, own the stolen car."

Said Bill Rodabaugh, a car-rental official with the Frankfurt-based German travel agency Deutsches Reisebuero: "I know of a case where a man rented a BMW, used an American Express card and drove into the East. The BMW was stolen, and they (the rental company) billed the man's card $30,000."

The theft problem

The major rental companies won't reveal how many cars they have lost to theft in eastern Europe. But Jeremy Snook, spokesman for Hertz's European headquarters in England, said his company has had the same restrictions as Avis since February 1993.

"The reason was simply security," Snook said.

Other familiar names in car rental - Budget, Dollar and National, for example - have similar policies.

There are exceptions to the rule. But they vary so much from company to company and country to country that, like bargain airline fares, any normal human will need help from a savvy travel agent to sort them out.

Of course, if you don't have to start your trip in the west, you can rent a car in Budapest, Prague or Warsaw from branches or affiliates of the big rental companies. But the price can be steep: I've paid as much as $150 for a one-day rental in Prague.

All of which suits Jerusalem-born Imad Khalid just fine.

Opportunity vs. problem

Khalid, who grew up in France, is president of autoeurope of Portland, Maine. In 1990, when Khalid took over, autoeurope had 10 employees. Today it has 250, he said, largely because he saw the Eastern Europe car theft rate as more opportunity than problem.

"I come from Europe myself and I knew two things," he said. One was that "not all cars would be stolen."

The demand for cars in eastern Europe, where Communism produced way too few and only a couple of clunky brands, is voracious. But few eastern Europeans can afford Western prices, so theft rings have flourished. In Budapest, Police Chief Janos Bodracske told me that 11,500 car theft were reported in his city alone in 1992.

But by the end of 1992, when the big companies quit renting to most customers driving west-to-east, Khalid saw that the thieves mostly wanted only premium makes: BMW, Mercedes, Volkswagen. They also seemed to want cars for which spare parts were easy to find.

"Any Volkswagen or any Mercedes that would go there would be stolen in two minutes," Khalid said. "But Opel, or GM cars, would not be stolen in eastern Europe, because they need spare parts and those countries do not have spare parts. So the thieves are not interested," Khalid said.

Since 1992, autoeurope has been renting Opels from Avis and another firm, Europcar, and re-renting them to consumers through travel agents.

Thanks to my well-informed agent, our recent vacation was saved from the rental companies' ban on west-to-east travel, which could have kept us from taking advantage of some cheap air tickets to Germany and some very inexpensive accomodations in Hungary.

Through autoeurope, I picked up an Opel Astra from Avis in Frankfurt and headed down the Autobahn to Hungary. But it cost me $825.95 for 29 days - nearly twice as much as my travel agent said it would have cost me to rent a Golf or similar car from Hertz for use in Germany only.

"Honestly, I charge double the price," Khalid acknowledged. "But if the car is stolen, I pay the car rental company myself."

Yet his losses to theft have been astoundingly low.

"In 1992, I started doing it and I had two cars stolen," said Khalid. "In 1993 I had two or three cars stolen, and in 1994, I've had no cars stolen - because I insist that the car in an Opel."

Richard Whittle is in the Washington, D.C., bureau of the Dallas Morning News.