By on January 5, 2009

Automotive News [sub] reports that car rental companies have dialled back their orders by 500k new vehicles. In ’07, they hoovered-up 1.9 million cars, trucks, minivans and vans for their customer’s delight. Last year, that number contracted violently, to 1.5m units. According to Robert Barton, president of the American Car Rental Association, it’s one damn thing after another. “Many rental companies can’t borrow money to finance the inventories they would like, Barton says. At the same time, he says, many franchised dealers cannot get financing to buy thousands of retired rental vehicles at auctions. As wholesale used-vehicle prices and demand fall, Barton says, rental companies are denied another source of money to buy new vehicles. That’s bad news for automakers, especially the Detroit 3, that traditionally have relied on rental companies to soak up their excess inventory.” Ya think? And what’s the bet bailout boys’ bulk biz will be even worse in ’09? Make the jump to count the cost.

“Enterprise Rent-A-Car, the nation’s largest rental company, expects to buy 400,000 new vehicles in the 2009 model year. That’s about half the total of recent years, spokesman Patrick Farrell said. The figure covers rental cars bought for the Enterprise, National and Alamo brands.”

Gm put a name to their pain, Chrysler and Ford did not: “Mark Mathews, GM’s director of used-vehicle activities, says the company expects to sell 450,000 2009-model vehicles to rental companies, down from 585,000 in 2008 and 600,000 in 2007.”

Is that based on GM’s projections or the rental industry’s? No prizes for guessing. But rental rep Bobby Barton joins the chorus blaming the credit crisis for unmoved metal, and reckons it’s a good time to buy. Well, for someone. Not him.

“Barton… says some automakers are doubling their usual incentives to encourage rental companies to buy vehicles. ‘If I had financing,’ Barton says, ‘I’d definitely buy some of these cars.’

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19 Comments on “2008 U.S. Rental Fleet Sales Down 500k– and Falling...”


  • avatar
    watersketch

    That does explain why car rental rates seem to have gone up over the year while car prices have gone down.

  • avatar
    psarhjinian

    Well, that pretty much screws Mazda, doesn’t it?

  • avatar

    In this case, the “Detroit 3” that rely on rental car sales would be

    Kia
    Hyundai
    Toyota

    At some airports, it’s getting tough to find a domestic vehicle to rent, compared to a few years ago where every parking garage at the major ports appeared to be hosting meetings of the Sebring Owners’ Club.

  • avatar
    autoemployeefornow

    Rental car sales are almost always a giveaway by the auto companies since they are sold at very large discounts. It does move product and some profit is made but not even near the profit they really need to run a profitable business.

  • avatar
    psarhjinian

    In this case, the “Detroit 3″ that rely on rental car sales would be…

    Yes, that’s true. Even rental agencies aren’t stupid: they know that your average Sebring won’t be worth a rusty cent at the end of it’s term, no matter how cheap it was to buy. It probably won’t be cheap to keep, either.

    Comparatively, a Spectra, Mazda6 or Sonata is going to hold up well, be worth something and can be bought for near the same money. You’d have to be nuts to buy domestic metal. Hyundai and Mazda were using the rental agencies to float their sales figures for some time now. Heck, even Volvo was getting into the game.

    Of course, percentage to fleet isn’t just rentals (the domestics still sell far more cars to far more government, corporate and NPO buyers than the imports do, but rental agencies aren’t going that route in droves much for the same reason “normal” buyers aren’t: cars like the Sebring are crap, and aren’t worth it.

  • avatar
    mikey

    As early as last summer the Impala plant was running flat out 3 shifts and some Saturdays.
    For better or for worse the rentals have kept us alive for the last few years.We kept a lot of people at work,and even made some OT.

    Fast forward 4 months.The Impala plant is down untill Feb 9th.When it fires up again the line speed will be turned down 20 jph and 3rd shift along with about 1300 jobs will be history.With Camaro comming on line and the 700 of us that retired there is a glimmer of hope for the low seniority.

  • avatar

    This doesn’t look good for Chrysler. (more so than the other usual suspects)

  • avatar
    psarhjinian

    As early as last summer the Impala plant was running flat out 3 shifts and some Saturdays.
    For better or for worse the rentals have kept us alive for the last few years.We kept a lot of people at work,and even made some OT.

    I really worry about the Lacrosse/Allure/Impala plant. The Buick goes to Epsilon pretty soon, which leaves just the Impala and Camaro. The Impala looks increasingly pointless next the Malibu, and it’s getting harder to make the W-Body compliant with modern crash standards. That leaves the low-volume Camaro.

    Unless GM is going to exhume the idea of a Zeta sedan for Chevy—not likely, given that the mass market doesn’t care about which wheels are spinning and the Malibu really is very good—Oshawa Car is in real trouble.

    Of course, it is GM’s highest-quality plant, not that such a thing matters

  • avatar
    davey49

    I’ve never rented a car. Does this mean that rentals will be older cars? I could see some companies keeping their cars past 20K miles as opposed to getting rid of them at 10K.

  • avatar
    TheRealAutoGuy

    Robert,

    Your post failed to mention that the AN article quotes two seemingly contradictory facts, both of which are deserving of mention.

    1. That’s bad news for automakers, especially the Detroit 3, that traditionally have relied on rental companies to soak up their excess inventory.” This was the fact you mentioned…

    2. Too often, the auto companies have said, rental cars and trucks flooded the used-vehicle market once they left service, depressing prices and residual values. So in recent years, the Detroit 3 have reduced their sales to the rental fleets. [emphasis added]

    GM, F, and C have been doing an admirable job in the past few years of getting off the rental car heroin.

    Your readers deserve to know the Whole Story.

    Thanks for reading

  • avatar
    TheRealAutoGuy

    psarhjinian :

    “Of course, it is GM’s highest-quality plant, not that such a thing matters”

    Chuckle.

    Oh, ya, that’s right: The car that’s better than the Camry.

    Oshawa — soon to be home to the Camaro, too.

  • avatar
    psarhjinian

    Oh, ya, that’s right: The car that’s better than the Camry.

    Don’t confuse assembly-based quality with overall quality or performance. Independent agencies have rated the quality of the assembly in Oshawa Car as the best in North America (if not the world) on several occasions.

    Yes, the W-Body is actually a crappy car, holistically speaking. Yes, GM made several boneheaded decisions with regards to design and parts sourcing (plastic intake manifold, anyone?). That doesn’t mean that Oshawa doesn’t do it’s best despite that.

    And GM is rewarding that by starving the plant. Nice job, there, guys.

  • avatar

    TheRealAutoGuy :

    As we reported when rental reductions were Detroit’s excuse du jour for lowered sales, the D2.8 didn’t reduce their fleet sales. The rental agencies reduced their fleet purchases.

    There’s a big difference between GM/Chrysler and yes Ford spin and reality. In case you hadn’t noticed. Yet.

  • avatar
    taxman100

    When I was in L.A. over Thanksgiving, all that was available was one Chrysler 300, one Dodge Magnum, one LaCrosse, and dozens of Toyota Avalons, all with mileage in the upper 20’s.

    If a Lucerne was there, I would have taken that. Instead, I got to be underwhelmed by an Avalon for a week.

    Who buys ex-rentals with 30,000 miles on them?

  • avatar
    mikey

    psarhjinian

    The W Buick is gone, history so to speak.

    Anyway I just bought one of those Oshawa built cars.
    Its a beautifull Black on Black Impala LTZ loaded
    If you still live around here you might see it,you know the one with the BUY DOMESTIC licence frame.

    If you miss it not to worry I plan to get 15 to 20 years out’a my crappy car.

  • avatar
    jkross22

    So I can expect to drive an even older, even worse maintained rental car. Outstanding.

    If anyone has ever rented a car in Chicago, you know what I’m talking about. I’ve traveled there 20 times in the last 10 years and can recall once receiving a car that didn’t have transmission problems, warped brake rotors, treadless tires, etc. Rental car companies seem to do little more than oil changes (or at least resetting the oil monitor), washing but not drying the exterior and dumping 1/2 bottle of Febreeze in the car.

    Rental car companies suck.

  • avatar
    psarhjinian

    If you still live around here you might see it,you know the one with the BUY DOMESTIC licence frame.

    I never lived in Oshawa. I did in Whitby for a time, then downtown Toronto for a long while. I’m a ways east and north of you now.

    I see a lot of those plates, though much fewer than I used to, especially when I go back home (St. Catharines). Truthfully I don’t see them when I drive through Pick/Ajax/Whitby/Oshawa as much as I used to, either.

    If you miss it not to worry I plan to get 15 to 20 years out’a my crappy car.

    I tried to like the Impala because it is the home team, and several of my family members did work either at the truck plant, or in the head office. I really did try, but the rear seat space is really bad for a) car-seat fit is just not good, b) crash safety isn’t either, and c) the size of car versus it’s useful space. For the price and size it’s a decent enough car (a coworker owns a SS, which he got for very little) but the Malibu is much better overall.. Keep in mind you get the car much cheaper than I would, and that your needs in a vehicle are much different from mine.

    I’d buy local if GM made something I wanted to buy. The closest they do is the Vue, which isn’t very “local” at all, or the Uplander, which is just a pile of crap, assembled in Mexico to boot.

    The local candidate—for me—is the Ford Flex, which is total, unrepentent overkill for what I need, but Ford dealers are very willing to bargain.

    I think it’s a crying shame the way GM has treated Oshawa; they were a better plant than Ford’s Oakville Assembly and it got them nowhere near the respect.

  • avatar
    John Horner

    Interesting stuff. It has only been because of marketplace vagaries and long running force of habit that rental car companies have turned over their stock so rapidly. We might see them push the fleet retirement point out to 40-50k miles instead of the 20k miles which used to be the standard. If so, turnover could drop from 1.9 million units per year to 850k or so per year.

    The depreciation curve from 20k through 40k miles is much shallower than that from 0-20k. Rental car company profit could probably be improved simply by running the cars a bit longer. They will have to up their game on maintenance in order to preserve customer satisfaction and resale values, but there is no fundamental reason they can’t get that act together.

    “Yes, the W-Body is actually a crappy car, holistically speaking. ”

    Indeed, the Impala is a well assembled mediocre car. The back seat is uncomfortable, the handling ponderous and transmission durability is suspect. I’ve spent quite a few miles in both the modern Impala and the modern Taurus, and teh Taurus is a far better vehicle. None of the Impala’s problems, however, are do to anything the Oshawa production people have done.

  • avatar
    Patrickj

    John, From what I’ve seen of rental cars at 30-35K miles, even the best car run 50K miles in rental service will go to the crusher by 100K.

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