• Jan 10, 2009
Last summer, it was the Detroit Three that were restraining themselves from dumping cars into the gaping maw of fleet sales just to boost the bottom line. Turns out they had some help with that discipline: Due to last year's events, rental car fleets shrunk by 400,000 units from 2007 to 2008. As we begin 2009, rental car companies have declared they will be trimming their fleet orders and curbing the number of vehicles they keep on hand even further.

Rental car companies have been thrown under a number of buses as of late. They can't borrow money to finance purchases; the recession has hammered the travel industry; wholesale used vehicle prices are falling (making rental car fleets less valuable); and besides that, car dealers can't get the money to buy the retired rental cars anyway, which subtracts yet another revenue stream.

Rental companies have been good for something like 15% of sales from General Motors, Ford, and Chrysler. But not this year: Enterprise, which also buys for National and Alamo, will buy half the number of cars it did last year, and they'll keep those cars a couple of months longer. Hertz, Dollar, and Thrifty also said they will buy fewer cars and work them longer. The automakers have doubled incentives to encourage sales, but there are simply no teeth left in the rental business with which to bite.

Thus, don't be surprised to find a few more stains on the seats and a few more miles on the clock the next time you find yourself at the wheel of a rental car.

[Source: Automotive News, Sub Req.]


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  • 15 Comments
      • 6 Years Ago
      In the long run this is a good thing. I worked for an auto auction and rental fleets such as National, Hertz, and Enterprise would sytematically dump their cars after a short period of time and you would see rental vehicles that had 20K miles and less, (much less) go through auction. The fact that these were current model year vehicles, still under warranty, and most had less than 10K miles on them would make it much cheaper for the consumer to get a new car at 1/3 to 1/2 less than brand new. This resulted in a faster than average depreciation of new cars and therefore added to the cycle that has screwed us on the credit side as most Americans are upside down on their car loan for 7/8 of the time spent paying it off. And since most of this country bases itself on vanity, the number of car loans that were written have negative equity rolled into them because it would be a crime to be seen in the same car for more than 4 years.

      Now here is how it hurts the dealer.
      Bank rate on a current model year vehicle used is hard to establish so most banks would finance the vehicle for 10-15% less than approximate MSRP. The dealer who bought the $20K MSRP rental car for say $10K and sells it for $13K can still roll in $5K worth of negative equity and get that buyer into a new car without having to pull out the check book.

      • 6 Years Ago
      Actual rental fleet sales in the latest release (June 2008) by fleetcentral.com. Below are the % of total sales that went to rental fleets.

      Kia 33.36%
      Chrysler 27.45%
      Mazda 24.15%
      Hyundai 23.48%
      GM 15.60%
      Ford 13.58%
      Nissan 13.07%
      Toyota 7.40%
      Honda .75% (this rental fleet % is the envy of the U.S. auto industry)

      This explains why Honda has the best resale values in the industry.


      Rental fleet marketshare held by each manuracturer as of June 2008.

      Chrysler 25.86%
      GM 25.14%
      Ford 14.28%
      Toyota 8.69%
      Nissan 6.77%
      Kia 4.74%
      Hyundai 4.71%
      Mazda 3.44%
      Honda .53%

      The two companies that increased rental fleet market share the most in the lastest survey were Nissan (up 1.68 points) and Toyota (up 2.06 points). Most improved at reducing their marketshare in rental fleets was GM (down 7.66 points).


        • 6 Years Ago
        Oh yeah, and it's a good thing domestics were proactive on this front PRIOR to this point or sales decreases would have been more pronounced.
        • 6 Years Ago
        Very interesting post. Thanks for taking the time to dig up the info.
        • 6 Years Ago
        "Honda .75% (this rental fleet % is the envy of the U.S. auto industry)"

        Yeah - except that Honda dealers are the ones who sell to the rental companies, thus enabling Honda to seem holier than thou.
      • 6 Years Ago
      Remember the good ol' days when they turned them over between 15k and 25k miles?
      The last one I got had 49k miles on it, I have also gotten them recently with 45k and 32k.
      We are exclusively Hertz. The condition of these high mileage cars is deplorable. The 49k was an Azera. It actually seemed like it held up fairly well, but the interior was disgustingly filthy. I am embarrassed to put customers in these cars. They ask where it came from, I tell them Hertz, they are obviously not impressed. The rental car companies are not doing themselves any favors like this. If you're going to keep it for 50k or more, at least spend a couple hundred bucks and get it detailed around 25k.
        • 6 Years Ago
        They probably did get it detailed around 25K. People are just that disgusting when its not their own car to take care of.
        Drive it like you stole it... right?
        • 6 Years Ago
        Agreed, people are gross. Seriously though, I hate em.
        • 6 Years Ago
        It is truly hard to think of 49K as anything resembling high mileage. In my book that's still a pretty new car, maybe 20% of the way through its life. I've never rented a car, but are people truly that hard on things? No respect for property that isn't theirs?
        • 6 Years Ago
        I always suspected that I was one of the few people who cleans their own trash from their rental car before they return it.
      • 6 Years Ago
      one point that they did not mention that has also hurt the rental car industry is that body shops aren't fixing as many cars as they have been thus customers are not getting rentals. People are either cashing out on their damages, can't afford their collision dect, or people are just driving less and more careful. either way the lack of accidents has also really hurt rental car companies as well as body shops.
      another point is if people aren't buying more cars they aren't getting them services as much and that also affects rental volume.
      • 6 Years Ago
      I have a rental car about twice a month and rarely get a domestic. I end up with a Hyundai at least 75% of the time. #2 is Mazda. I don't know about those Chrysler numbers - I can't remember ever getting one as a rental. Weird.

      In the "Ford Focus or similar" category, I will end up with a Corolla half the time and a Mazda3 the rest of the time. In the last 3 years I've had 1 Focus. I don't know why the category hasn't been renamed the "Toyota Corolla or similar" category.

      For the midsize cars, as I said, it is almost always a Hyundai Sonata with the odd Mazda6 thrown in. Once I got a Mercury Milan, but when the desk worker pulled the keys out and saw what it was for she got a confused "where did this come from?" look on her face. I'm guessing they don't see them too often. The car had about 35,000 miles on it, which is pretty high for a rental. I don't think I've ever had a Sonata with more than 7500 miles on it. Either they fall apart quickly under rental stress, or Hertz has fast turnover for their midsize cars. Which would make the Milan even more head-scratching.
      • 6 Years Ago
      The reality is that new cars can now be purchased for less than the wholesale value of a used rental car. All the rental car companies that by risk units are taking massive losses. The main reason that they will not cycle out their cars as often is because they will lose money.

      Imagine you purchased a new house that cost you $200K and the builder is now selling new homes on your block for $170K. There is an instant loss. Since the auto manufacturers cannot sell cars these days and since they keep adding incentives and rebates to spur sales, it has a negative effect on used car values.
      • 6 Years Ago
      Every time they stick me with a Hyundai or Toyota I like to put my buggars on all the dials and stop at the Quick mart, pick up a carton of fresh bait and stuff it under the seat.
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