Car rental prices

Excerpts from
http://www.businessweek.com/magazine...3/b4006072.htm


Detroit has long pumped out cars that no one wants to buy, only to fob
them off on rental fleets for next to nothing. But as Ford and General
Motors downsize, they are closing plants that for years have churned
out mostly plain-vanilla rental cars. With fewer of those tired old
models left to buy, rental companies will have to start ponying up for
more desirable cars. That means higher rates for the traveller.

As Ford and GM race to match factory production to retail sales, they
are raising the prices and fees they charge the likes of Hertz Avis.
So far this year, the rental agencies have jacked up the average price
at the counter for a midsize car by more than $7, to $59 a day. That
follows a jump of just $2 a day during all of last year.

Rental agencies can't ease the cost pressure by acquiring more Asian
models. Japanese carmakers limit their rental sales. The Koreans sell
more to fleets, but not enough to offset the rise in prices. Costs to
the rental car companies have gone up dramatically in the past 24
months, and are up 20% just this year. You bet they are going to pass
it on.

For years, consumers and rental firms have benefited from the fact
that Detroit has been out-producing demand. To keep plants humming,
and to keep busy the union workers they were contractually forbidden
from firing, Detroit's Big Three sold discounted, bare-bones models to
rental fleets. In some cases the carmakers practically gave the cars
away. For example, the manufacturer would give a rental company $1,000
in rebates to buy a car for its rental fleet. Then the automaker would
agree to buy the car back after four months at the sale price, minus
$250 a month for depreciation.

These days, the prices are rising and the rebates are falling. Detroit
also is buying back fewer of the used rental cars, leaving the rental
firms to shoulder the risk of making money on resale. Since
stripped-down models are tough to sell, the rental companies are
paying for options like leather seats, sun roofs, and better stereos.

The rental companies think their prices on cars will only get worse
for the foreseeable future. By the end of this month, Ford will close
its Atlanta plant, which made about 150,000 Tauruses this year, or
about 8% of US rental buys. Next year GM will close a plant in Ontario
that makes the oft-rented Pontiac Grand Prix sedan. Last year GM
closed a Lansing plant that built the old Pontiac Grand Am and Chevy
Malibu Classic.




--

The government is unresponsive to the needs of the little man.
Under 5'7" it is impossible to get your congressman on the phone.

....Woody Allen

"Steve" wrote in message
...

Excerpts from
http://www.businessweek.com/magazine...3/b4006072.htm


Rental agencies can't ease the cost pressure by acquiring more Asian
models. Japanese carmakers limit their rental sales.

Why the **** would the Japanese do THAT?!?

Mike T. wrote:

"Steve" wrote in message
...

Excerpts from
http://www.businessweek.com/magazine...3/b4006072.htm


Rental agencies can't ease the cost pressure by acquiring more Asian
models. Japanese carmakers limit their rental sales.


Why the **** would the Japanese do THAT?!?



I suspect that he intended to say is that Japanese companies limit the
number of subsidized fleet sales. I doubt that they would limit retail
sales. That would still increase the cost to rental companies though.

BW Detroit has long pumped out cars that no one wants to buy, only to
fob
BW them off on rental fleets for next to nothing.

Government motor pools that are restricted by either law or political
reality to American cars also constitute a substantial market for
something similar in trim level to a rental car. Most of these
customers consider premium features to be poor stewardship of the tax
dollar (and perhaps also inappropriate for the rather knockabout uses
of many of the cars).

Interestingly, driving our motor-pool cars has made me think "Hmm, this
is not so bad" with regard to the last year of the Taurus and the
present generation of sedans and vans from Chevy.

BW stripped-down models are tough to sell, the rental companies are
BW paying for options like leather seats, sun roofs, and better
stereos.

That doubtless means "tough to sell *at the price they want*. Rental
and fleet cars may get turned over in a few years or fre to several
tens of thousands of miles, but those are dog years. People will buy
such a thing but may be reluctant to pay blue book even if it does have
some features and even a token warranty. So drop the price.
There's always a market for an inexpensive, functional transportation
appliance sort of car. They'll sell.

--Joe

On 13 Oct 2006 12:26:02 -0700, "Ad absurdum per aspera"
wrote:

BW Detroit has long pumped out cars that no one wants to buy, only to
fob
BW them off on rental fleets for next to nothing.

Government motor pools that are restricted by either law or political
reality to American cars also constitute a substantial market for
something similar in trim level to a rental car. Most of these
customers consider premium features to be poor stewardship of the tax
dollar (and perhaps also inappropriate for the rather knockabout uses
of many of the cars).

Interestingly, driving our motor-pool cars has made me think "Hmm, this
is not so bad" with regard to the last year of the Taurus and the
present generation of sedans and vans from Chevy.

There is no "last year of the Taurus" It's still built, although only
for the rental car companies. BTW, I have one of those. It's
awesome. It just won't break and gives very good mileage for a car
it's size.


BW stripped-down models are tough to sell, the rental companies are
BW paying for options like leather seats, sun roofs, and better
stereos.

That doubtless means "tough to sell *at the price they want*. Rental
and fleet cars may get turned over in a few years or fre to several
tens of thousands of miles, but those are dog years. People will buy
such a thing but may be reluctant to pay blue book even if it does have
some features and even a token warranty. So drop the price.
There's always a market for an inexpensive, functional transportation
appliance sort of car. They'll sell.

--Joe

Hello, George!
You wrote on Fri, 13 Oct 2006 15:39:13 -0500:

BW Detroit has long pumped out cars that no one wants to
BW buy, only to
?? fob
BW them off on rental fleets for next to nothing.

GM There is no "last year of the Taurus" It's still built,
GM although only for the rental car companies. BTW, I have
GM one of those. It's awesome. It just won't break and gives
GM very good mileage for a car it's size.

BW stripped-down models are tough to sell, the rental
BW companies are paying for options like leather seats, sun
BW roofs, and better

I recently traded in my Taurus Station wagon. It was the earlier
model and, IMHO, the best looking recent domestic wagon.At
least, it looked like it might have been designed as a wagon and
not like they had stuck an extension on a sedan! It was not
exciting but it worked!


James Silverton
Potomac, Maryland

E-mail, with obvious alterations:
not.jim.silverton.at.comcast.not

Hey, I'd gladly pay $10 more a day to drive a car that's actually
desirable. They stil have Hyundai to turn to if they want inexpensive
cars, though, right?

Incidentally, depending on where you go right now, you can get some
pretty sweet vehicles. I was at a (I think) Hertz in San Francisco last
year, and they had the option of renting a G35 sedan. Vroom

JB Sharkstick wrote:
Hey, I'd gladly pay $10 more a day to drive a car that's actually
desirable. They stil have Hyundai to turn to if they want inexpensive
cars, though, right?

Incidentally, depending on where you go right now, you can get some
pretty sweet vehicles. I was at a (I think) Hertz in San Francisco last
year, and they had the option of renting a G35 sedan. Vroom


Although it'll be a long time before I even think about buying another
Hyundai, I have no problem driving them as a rental. They just don't
last very long - at least in my unfortunate experience.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com

"Frank F. Matthews" wrote in message
...


Mike T. wrote:

"Steve" wrote in message
...

Excerpts from
http://www.businessweek.com/magazine...3/b4006072.htm


Rental agencies can't ease the cost pressure by acquiring more Asian
models. Japanese carmakers limit their rental sales.


Why the **** would the Japanese do THAT?!?

I suspect that he intended to say is that Japanese companies limit the
number of subsidized fleet sales. I doubt that they would limit retail
sales. That would still increase the cost to rental companies though.


Because there is a Federal agreement with Japan to only supply 2 million
cars a year to the US. Why the average price of a Japanese car has also
risen. They cut out the low end cars.

"Calif Bill" wrote:

Because there is a Federal agreement with Japan to only supply 2 million
cars a year to the US. Why the average price of a Japanese car has also
risen. They cut out the low end cars.

That agreement may still be in effect, but its been years since it has any
practical effect as the vast majority of Japan branded vehicles are produced in
the US. In any case, the low end vehicles come from Korea these days, not Japan.

I have rented hundreds of rental vehicles and I have yet to see many low end
stripped vehicles. The ones in the business fleets (ie Avis, National, Hertz,
Dollar, etc) tend to be mid line vehicles (ie Altimas, Taruses, Grand Ams, etc)
with full power & stereo gear. Those are all produced in the US.