People Aren’t Renting Cars, Hurts Automakers

In addition to the problems they’ve had getting consumers to buy new cars, automakers are having to deal with the fact that fewer people are traveling and renting cars.

As tourists stay home, rental car companies are cutting back on their fleets and not making bulk purchases of new cars, as they used to. “Fleet sales” to rental companies and cities make up 20% of typical auto sales during a year. In January, Chrysler’s fleet sales fell a drastic 81%, followed by GM with an 80% drop and Ford’s dropped 65%.

Hertz and Enterprise are following through on promises to cut the size of their fleets, selling vehicles and not replacing older ones. They’re selling the cars into a weak market, but the used car market has lately rebounded.

Since cars are often sold as part of fleet sales at deeply discounted bulk prices or to unload unwanted inventory, lack of fleet sales reflects a drop in raw numbers of cars sold but not necessarily on profits. Thrifty/Dollar has an allegiance with Chrysler, Avis with GM, and Hertz with Ford. All these domestic auto companies are more likely to buy cars from domestic automakers than from foreign companies.

Enterprise announced plans this week to purchase 5,000 gas/electric hybrid sedans and SUVs to meet growing demand for hybrids among customers. Most of the hybrids purchased are Toyota Priuses, but some are Ford Escapes and Toyota Camry and Nissan Altima hybrids.

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