Tis better to own a Leaf or an S than to rent one, it seems. According to Enterprise Holdings Inc., known for driving around in cars wrapped in branded brown paper for some reason, customers who rent electric-only vehicles from their lot soon return their sustainable rides for a one with a sustainable range based on the number of (gasoline and diesel) fuel stops along the way.
TTAC has a long tradition of digging deep into manufacturer sales data, frequently focusing on retail versus fleet sales. It’s become commonly accepted that high fleet percentages are a sign of weakness in product lines, at least as far as retail consumer preference goes. The traditionally low fleet percentages of Japanese brands have been singled out as evidence of those companies’ ability to attract crucial retail dollars, or at least their superiority in matching production to demand. And they were right. For many years, Toyota and Honda in particular could count on strong retail sales of premium-priced products in a way that the Big 3 couldn’t. Changing trends in the American vehicle market are undermining this model, though.
With car sharing on the rise, my home state of Oregon is moving towards changing insurance rules to allow private “peer to peer” rentals by auto owners. The Oregonian reports that HB 3149 is headed for the Governor’s desk, having been approved by the state House and Senate. Sponsor Rep Ben Cannon explains
Most insurance policies prohibit people from using their cars for commercial purposes. This bill says someone can participate in car sharing without having to worry that their insurance will be canceled.
California is the only other state to have passed such legislation, and already Facebook-based peer-to-peer car rental firms like Getaround have popped up to fill the demand. With average car ownership costs reaching $8,000 per year according to the AAA, Cannon argues that research showing that cars sit parked for 90% of their lives proves the need for more car-sharing flexibility. And established car-sharing firms like Zipcar, which operate their own fleets don’t feel threatened by the bill, as they are not expanding beyond urban cores and as Zipcar’s CEO puts it, peer-to-peer rentals validate the car-sharing model. But would you rent your car to a stranger?
We’ve long struggled with finding the right balance of recall coverage here at TTAC, as the sheer volume of them makes it extremely difficult to separate the life-saving wheat from the irrelevant chaff. Now, it seems the rental car industry is tired of struggling with the same challenge and is lobbying the government for reform of the recall system. Bob Barton of the American Car Rental Association explains the problem to the NYT
We can’t determine the significance of a recall and whether a vehicle is no longer safe to operate or whether it can continue to operate and then should simply be brought in for service at some point in time. We simply want the manufacturers to instruct us when a vehicle needs to be grounded and we will absolutely comply.
Fair enough. Recalls are carried out for plenty of non-safety-critical problems. But where do you draw that line? And, more importantly, does the rental industry enjoy enough of a reputation for safety consciousness to assure customers that their calls for reform won’t result in any increased danger?
Think BMW sells a lot of cars in the US? The German automaker may have registered nearly 20,000 “sales” in the US last month, but according to the analysts at Polk, over 50 percent of its “sales” in 2010 were actually leases. No wonder BMW’s best-seller, the Dreier (3 Series), occupies a nearly unique position on the price-volume frontier. And apparently BMW will continue to look to non-sales for future sales growth, as Automotive News [sub] reports the firm has launched a new car-sharing joint venture in Europe aimed at bringing in a million new customers by 2020. The pitch: sleek new Bavarian metal, as well as the ability to pick up and drop off vehicles anywhere, thanks to smartphone vehicle tracking. But the biggest pitch, say BMW sources, is to people who would never buy a new BMW… or even lease one. And they’re not just talking about poor folks either…
One of the questions that came up in yesterday’s post, The Truth About The Ten Best-Selling Sedans Of 2010, was how to interpret a high percentage of fleet sales. After all, “fleet sales” could describe a huge variety of sales to diverse buyers at widely varying price (and profit) points. Rental fleet sales are widely seen as being far worse than other types of sales, which is why the resale value trackers at Automotive Lease Guide keep such a close eye on what they call “Rental Fleet Penetration.” In its latest newsletter, ALG notes
ALG tracks several key metrics that impact residual values and brand health. Of these metrics, rental fleet penetration (RFP), which ALG measures as the total number of vehicles sold into rental fleet channels divided by total sales, has been found to have an impact on both residual performance and perception of quality… As a general rule, ALG recommends RFP levels below 10% for Mainstream brands and <5% for Luxury brands to avoid any negative impact from rental fleet sales on residual performance.
NHTSA Investigation Action Number AQ10001, opened November 18, 2010 notes:
The agency, particularly in recent months, has been informed of incidents involving allegations of personal injury and death claimed to have been caused by safety defects and failures to conform to minimum Federal Motor Vehicle Safety Standards (FMVSS) on rental car vehicles for which a safety recall to remedy the safety defect or noncompliance had allegedly not been performed prior to the rental car company’s lease of the vehicle. NHTSA understands that there is presently a petition before the Federal Trade Commission (FTC) seeking to prohibit at least one rental car company from renting vehicles on which safety recall campaign remedies remain outstanding. The purpose of this audit query (AQ) is to investigate recall remedy completion by rental car companies on the above-listed safety recall campaigns. These campaigns were chosen due to their inclusion of vehicles used in the rental market. This information is expected to provide the agency an indication of how completely and how quickly rental car fleets, in general or individually, perform necessary recall-related repairs or other remedies on the vehicles owned and then leased for use on the roadways.
But rental companies wouldn’t risk the safety of their customers for a buck would they? The Enterprise/Alamo/National syndicate tells Bloomberg it grounds cars upon receiving recalls… Hertz and Avis have yet to chime in. The weirdest part of it all: only vehicles made by GM, Ford and Chrysler are being investigated. Why are the Accents and Rios receiving recall repairs while Avengers and Malibus are left to be investigated for “failures to conform to minimum Federal Motor Vehicle Safety Standards”? Whiskey Tango Foxtrot? A list of vehicles under investigation can be found below the fold.
Fleet sales were up 47 percent in the first quarter of this year, driving sales at a number of automakers. Ford, in particular, is targeting fleet sales unapologetically by touting a recovery in resale values for the Blue Oval Brand. Ford’s Mark Fields tells the Freep:
We love fleets at Ford…Ford remains focused on our disciplined approach to daily rental, making sure we help keep growing residual values
At Chrysler, which suffers from some of the lowest resale values in the business thanks in part to a longtime addiction to fleet sales, the response seems a bit more… conflicted.
I’m going down to Memphis
Where they really playin’ the blues
I’m going down on Beale Street
And have a good time like I choose
“Thank you for coming to Budget. I have you booked for a Kia Optima.”
“The hell you do.”
“That is a full-size car as you requested.”
“Well, in that case, I want something that is not a full-size car.” And that is how I came to be rolling through the proverbial Dirty South in a 2100-mile, 2010-model-year Town Car. Yes, they still make ‘em. The current lineup has been rationalized to Signature Limited (117-inch wheelbase) and Signature L (123-inch). There’s absolutely no reason of which I can think to take the SWB car, but that’s what the rental fleets have, and it’s what you can easily buy off-lease. I’ve found plenty of essentially identical two-year-old SigLims for under $20K, so this car is not only a direct used-price competitor for the 2009 Sable I reviewed previously, it’s also in the same ballpark as… a Kia Optima.