2008 U.S. Rental Fleet Sales Down 500k– and Falling
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.’
More by Robert Farago
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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.
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.