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.

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.

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.

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.

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

I was at an airport that I have flown into the Southeast last Christmas season. When I say flown into, as a pilot and aircraft owner. My wife’s family had flown in on the commerical side and was using a major car rental company. That company had no cars. None of the other majors had cars. I called the FBO on the general aviation side and found out that they had cars. The FBO looked me up on their records, confirmed my status as a customer, DROVE over in their van WITH the car for my family – gave them the car and took the guy who drove the car back over to the other side of the airport.

I called the rental desk at the airport and the manager who I spoke with earlier answered – he knew were Presidents Club and did zippo for us – I asked him if he knew that he had cars over at the FBO. He said yeah, but those where ‘their cars.’ and he could not touch them. I said sure he could, just call them up and bring the cars back over – ‘too much trouble, glad you found a car for your family.’

And these companies wonder why they are going under.

http://www.deliciousbaby.com/journal/2007/dec/22/advantage-rent-cars-frightening-car-seats/