Rental car rental companies are starting to see more and more customers with cars they cannot afford to keep and are looking to cut prices to boost profits.
The big rental companies have been scrambling to get their vehicles into more and bigger fleets as they face a mounting cash crunch.
They have slashed prices, cut out-of-service fees and increased the number of rental cars available to lease.
They also are adding to their fleet of vehicles to make sure they get the cars they need.
But they have found that some customers don’t want to buy a new car for a rental and may not be able to afford to pay for it.
“Some of the vehicles are out of stock and you can see they’re not going to be able afford to put it out there,” said Tony Sallenberger, vice president of leasing for Hertz International Inc. in suburban Philadelphia.
The rental companies that have tried to find buyers for their cars say they are losing money on each rental. “
So you’ll have more people who are struggling to pay, and you’ll be putting more of them in the market that aren’t going to get it.”
The rental companies that have tried to find buyers for their cars say they are losing money on each rental.
Some of the rental companies, such as Zipcar Inc. and Car2Go Inc., are starting off by leasing only to new cars.
They will try to increase their stock of cars as the economy recovers, but they face competition from car rental agencies that offer cars for rent.
“We are very pleased to see that we’re seeing some gains from the rental car industry,” Sallanberger said.
He said leasing companies have taken steps to try to make renting more affordable.
But some are also taking steps to cut the number and types of vehicles available for rental, such a by cutting out- of-service charges and reducing the number, size and color of the cars.
Hertz, for instance, cut the price of a car in its fleet from $4,000 to $2,000 a month.
That reduced the number by about one-third.
Car2go is cutting the price from $3,000 per month to $1,500 per month.
Car Rent-A-Car Inc., which offers rental cars through its leasing program, said it is not going anywhere.
“At the end of the day, it’s all about profitability and maximizing revenue, and that’s the bottom line,” said Josh Rizzo, a senior vice president at Car2Get.
“It is the right thing to do for us to do, to try and make our business as profitable as possible.”
The biggest rental companies say the decline in rentals is being driven by rising prices.
But there are signs that the rental market is not recovering from the recession that ended in June 2009.
The rental industry in general is not booming and car rental rates are still not high, said Rizzop.
And rental companies do not yet have enough cars to meet the demand they are seeing.
“If you’re renting a car and it’s out of commission, you have to have more than one car,” said Tom Gorman, president of Hertz Cars Inc. “People want to get out of cars and start living independently, so they need to have the cars.”
The recession hurt the rental industry, which lost $8 billion to $9 billion last year.
The recession also hurt rental car leasing companies, but the biggest ones, such the Zipcar and Car1Go, have not seen a big drop in business.
Some are saying that they have not had to look far to find a buyer for their vehicles, and others are just trying to survive.
“I think it’s hard to predict how things will look in the long run, but it’s certainly better than it was before,” said Rizzi, the Car2Got spokesman.
Rent-a-Car spokeswoman Liz Williams said the company does not expect to see any drops in rentals as the recession and recovery from the financial crisis has lifted people’s spirits.
“Since 2009, we have seen a lot of positive economic changes in the rental marketplace,” Williams said. “Rent-a