Dollar Rental Results Highlight Soft Used Car Market

dollar rental results highlight soft used car market

Slumping U.S. new car sales– and their effect on manufacturers– are getting a lot of ink (and unleashing torrents of the red variety). Meanwhile, the American used car market ain't a load of laughs, either. Dollar Rental has checked-in with their financial results for the first quarter of the financial year. Explaining their $297.9m Q1 loss, Dollar's CEO brings the noise. "As we had anticipated, weakness in demand and pricing in January, coupled with an increase in fleet costs, adversely affected our performance in the quarter." Now don't get to thinking that this is good news for The Big 2.8, reflecting their oft-stated commitment to cutting back residual-killing fleet sales. Dollar asserts that "vehicle depreciation costs per vehicle increased approximately 31 percent in the first quarter of 2008 over the first quarter of 2007, and were above the Company's expectations due primarily to softness in the used car market." In other words, unloading their old shit is proving problematical. Solution? "The Company expects that its new fleet optimization software, together with the anticipated extension of fleet holding periods, should moderate the increase in vehicle depreciation costs over the course of the year and should enable the Company to operate a more efficient fleet program." Bottom line: look for rental cars to get older and prices to go up.

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  • Robert Farago Robert Farago on May 13, 2008

    Geotpf:

    The Detroit 3 have stopped giving the rental car agencies cars for basically free, so the rental car places have cut back on buying, keeping the cars longer. Duh.

    s this article states, Dollar is NOT tagging the rising cost of buying their cars as their main drag on profits. It’s a selling problem. They can't unload them at the right price afterwards.

    You could argue, same diff. But it's not.

  • 50merc 50merc on May 13, 2008

    My understanding was that back in the days of "program car" used-car bargains, the cars were sold (leased?) to fleet operators with guaranteed buy-back prices (or lease termination values?). Fleets sold such cars only when they'd bring more than the factory's specified repurchase price. If those buyback deals have disappeared, then resale value would become much more important. Is there any reader who's in the industry and can inform us about this point?

  • Jthorner Jthorner on May 13, 2008

    "expects that its new fleet optimization software, together with the anticipated extension of fleet holding periods" This implies not only longer holding periods, but also closer attention to projected resale values when purchasing vehicles.

  • on May 20, 2008

    [...] Dollar Rental Results Highlight Soft Used Car Market Slumping US new car sales– and their effect on manufacturers– are getting a lot of ink (and unleashing torrents of the red variety). Meanwhile, the American used car market ain’ta load of laughs, either. Dollar Rental has checked-in …The Truth About Cars - http://www.thetruthaboutcars.com/ [...]

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