Comments on: Warning: Auto industry breakdown could spell big trouble for car renters

By: JOE MATRADOTZ

JOE MATRADOTZ — Sat, 28 Feb 2009 18:53:17 +0000

THE RENTAL CAR BUSINESS IS ON THE EDGE OF TOTAL COLAPSE AVIS AND HERTZ ARE NOW RENTING CARS WITH BODY DAMAGE AND WITH SAFETY ISSUES. I HAVE WORKED IN THIS BUSINESS FOR 22 YRS AND HAVE NEVER SEEN THINGS THIS BAD

By: ajaynejr

ajaynejr — Fri, 27 Feb 2009 16:33:36 +0000

Now why are Advantage’s customers being turned away without cars (too many customers for the supply of cars) while at the same time the cars are being repossessed (not enough customers for the supply of cars and therefore the rental agency is not making the monthly payments on the cars)?

If the rental agency is having trouble making ends meet due to a travel downturn or whatever, that is not the fallout from an auto manufacturing industry problem.

By: Spano

Spano — Sun, 04 Jan 2009 19:59:11 +0000

I am affected by the San Diego shut down as I had a reservation thru Advantage for a car, I was told HERTZ would be “honoring” the agreement but got some representatives talking out both sides of there mouth….”We will honor the reservation if cars are available”…”So if I reserve the car under my name and bring my receipts you’ll honor the agreement right?”..”If cars are available, yes we will”…so I guess I’m making another reservation with another company as a back up to a back up.

By: Peg Jimenez

Peg Jimenez — Tue, 09 Dec 2008 18:20:27 +0000

Avis has had major layoffs.

By: Kevin Morgan

Kevin Morgan — Tue, 02 Dec 2008 17:01:05 +0000

Ted – Perhaps Toyota only leases, not sells, vehicles to car rental companies, but I can assure you that the rental companies do carry Toyotas. I rented an RAV4 in August in Tucson.

In fact, my family purchased several Toyotas coming off rental many years ago–cars sold through their credit union. We still have one of those Camrys.

My guess, though, is that you’re right about the underlying financials. Fleet sales represent volume, but not high-margin sales, as the car rental agencies get discounted rates. Auto makers rely on the fleet sales to create enough volume to then sell cars to the public at a profitable price (the higher volume allows overhead to be spread thinner across more vehicles). In order to float these sales, the big 3 automakers also provide some of the financing.

In fact, historically, the big 3 automakers and the travel industry have both owned stakes in the rental industry (GM once owned more than a quarter of the Avis-Budget group; GM once owned Hertz, as did Ford, and as did United Airlines; Ford also once owned Budget; there are probably more). So the fortunes of each are intertwined with the others.

As business travel is sharply curtailed, car rentals no doubt follow, and business car rentals are the profitable ones, just like business air travelers. A rental agency which is deeply in debt facing a big slump in demand could easily find itself out of business in no time. If GMAC, Ford Motor Credit, etc. can’t roll over notes for the car rental companies to buy new fleets, and the car rental companies can’t pay the balloon notes due on the cars, then they could end up taking each other down.

By: Ted - Phoenix Justice

Ted - Phoenix Justice — Wed, 26 Nov 2008 02:49:03 +0000

MarkieA,

The automakers tend to sell vehicles to “fleets” at a greatly reduced rate, since they are buying in bulk. Also, the rental car companies need to borrow monies to pay for those vehicles on a rotating basis, normally from the financial arm of the auto company. With the Detroit 3 having financial problems, selling at a greatly reduced rate while also financing those sales is a bit of an issue.

As far as I know though, Toyota doesn’t sell their vehicles to rental agencies, in order to keep their resell value higher.

My guess is, Advantage has so much debt that they can’t service and with the credit markets dried up, kind of difficult to get new debt.

By: Jasper

Jasper — Tue, 25 Nov 2008 13:55:26 +0000

The longer I think about this, I care less. Rentals have been insulting my intelligence for years with bogus fees, completely random pricing and intentionally poor customer service.

I say: time to wipe ‘m out and give a chance to a couple of new smaller companies to start on a good note, with good customer service, transparent pricing, and friendly helpful staff. Prices will increase, but so will customer satisfaction, and my peace of mind.

By: Bruce InCharlotte

Bruce InCharlotte — Tue, 25 Nov 2008 07:19:14 +0000

A small plug for Advantage at Burbank. When United’s flight from DEN was running an hour late with a projected arrival of 11:15, I called ahead to the station to ask if they could help me. They did, staying open late to pick me up in my car with the paperwork ready. They also opened early (5:45 instead of 6:00) so that I could make my 6:45 departure.

By: MarkieA

MarkieA — Mon, 24 Nov 2008 18:27:41 +0000

Can someone explain to my dumb self why there would be a connection between the decline of the auto companies and rental cars companies. The car companies are in trouble because no one is buying cars, right? Well, rental car companies buy cars from the automakers to rent them to the public. So, you would think that they would be helping the carmakers. Is it just a matter of supply of new cars? Do rental car companies turn over cars so fast that they are burning through the supply from the carmakers? Then get them from Honda or Toyota, I guess. Maybe I’m really just missing soemthing obvious here.

By: Jasper

Jasper — Mon, 24 Nov 2008 11:53:35 +0000

Time for a Seinfeld:

http://nl.youtube.com/watch?v=A7uvttu8ct0