Rental cars may be about to flood the used-car market

[yortsed snacilbuper]

Now that rental car giant Hertz has filed for Chapter 11 bankruptcy, the company's next steps aren't clear. But if a whole slew of used rental cars suddenly hits the market, don't immediately shy away from them. Picking up a used rental car isn't always as bad as you'd think.

Car sales have been in terrible shape this year, mostly because of the COVID-19 pandemic. It's currently a buyer's market for sure, so if you're thinking about picking up something new for yourself, now might be the time to do it.

Hertz has no intention of buying any more cars for its fleets this year. In fact, Hertz and other suffering rental car companies are likely to sell off a big chunk of their fleets instead. Industry experts expect the companies to unload 1.5 million cars from their US fleets in the coming weeks and months, according to CNN Business.

What does that mean for you, a potential buyer? It means that you're going to have a lot more used cars to choose from, and probably at more favorable prices.

https://www.msn.com/en-us/money/companies/rental-cars-may-be-about-to-flood-the-used-car-market/ar-BB14JbrG?ocid=msedgntp

[A HERETIC I AM]

17. Not true.

Last edited Sat May 30, 2020, 03:17 AM - Edit history (2)

Please show evidence or your source for this.

There was an internet "meme" a while back that tried to suggest this, that the manufacturers build way more cars than they can ever sell and they just sit in lots until as you say, they "recycle, to make newer cars". It is utterly false and represents a lack of understanding how the global automobile supply operates.

Photographs of large numbers of cars parked on airport runways or in lots is not an indication of this mythical phenomenon.

[pbmus]

23. ....70 - 59.5 equals 10.5 million parked in lots all over the world....just this year

‘How many cars are produced in the world every year? In 2016, for the first time in history, over 70 million cars passenger cars were produced in a single year.’

Worldwide car sales 2010-2020
Published by Statista Research Department, May 7, 2020
The global auto industry expects to sell 59.5 million automobiles in 2020, a dramatic decrease of over 20 percent year-on-year. The sector is projected to experience a downward trend on the back of a slowing global economy and the advent of a pandemic in all key economies. Previously, it had been estimated that international car sales were on track to reach 80 million in 2019; however, as economic woes continue, demand for new motor vehicles is expected to be in the negative throughout 2020.

[A HERETIC I AM]

26. This in no way supports what you said above.

Your post #1 says;

"There are new car parks with millions of cars on them...They make them and don’t sell them and park them for 2-3 years, then send them to recycle, to make newer cars..."

Nothing in the information you posted above supports this.

I Googled the title of the blurb since you didn't provide a link;

https://www.statista.com/statistics/200002/international-car-sales-since-1990/

So why do you think that manufacturers "park them for 2-3 years"? Where is your evidence for this?

Sorry, but it simply does not happen. Sure, the Coronavirus has put a damper on the international car market, but that just means production will slow until the current unsold inventory is purchased. It is possible that could take up to 2 years, but it will happen.

The only thing that comes close to what you are suggesting was the short lived "Cash for Clunkers" program back in 2009, but that was a government stimulus and it expired.

The idea that auto makers just build cars, store them and "recycle" them is absurd. It doesn't happen.

[pbmus]

27. So building more than you sell by millions of cars every year...

Is not enough proof...?

Where are the built cars that are not sold?

[A HERETIC I AM]

28. It is NOT DONE EVERY YEAR!

LOL! Seriously, where do you get that idea?

2020 is an outlier, an extraordinary circumstance, but any and all extra inventory will work it's way through the system.

The piece you quoted said "it had been estimated that international car sales were on track to reach 80 million in 2019"

The key word is REACH. That does not mean all those cars have already been produced! Come on! You must understand that!

Plants have been shut down for weeks all over North America and all over the world. The global industry will not build 70 or 80 million cars this year.

You are conflating what was projected as if it has already been done.

Look...I was involved in the Automobile business, in both marketing and promotions as well as transport for over 25 years and during that time I saw just about all aspects of the industry, from manufacturing, testing, retail and the secondary market. I'm not going to sit here and spend an hour typing out a tutorial on how the auto supply chain operates, but please, take my word for it; No manufacturer could possibly stay in business if they built automobiles that didn't sell, and just sat in a lot somewhere, by the millions, as you seem to suggest, only to crush them and recycle them. It just can not and does not happen that way.

I don't know where you got this idea, but I have a sneaking suspicion. There was a Facebook meme that went around a while back, featuring numerous photos showing large lots packed with cars, one was even an airport, and it was suggesting that car builders just build cars willy nilly and park them, as if the whole industry is a scam. It was nonsense and utterly untrue.

Pictures like this for instance, were used to suggest that car makers are pulling a scam, and that they build too many and just park them;



When in fact, that is a photo of flood and otherwise DAMAGED cars all from one event - Super Storm Sandy in 2012.

There are occasions where a particular model doesn't sell as well as hoped, and hundreds or even thousands of them sit at dealers or in shipping yards for sometimes in excess of a year. But even those get sold eventually, either through drastic markdowns or via the nationwide auction system, the latter BTW, during normal times in the US alone, handles MILLIONS of used cars a month, sold to dealers and then to consumers.

I'm sorry, but you are laboring under a misapprehension. The automobile makers of the world do not build millions of extra cars that go unsold each year.

It simply DOES NOT HAPPEN.

[pbmus]

31. Ok, I will delete my original opinion...it was wrong

Thanks for the correction...

[A HERETIC I AM]

32. Cheers.

Sorry for the tone, it's just a subject that is close to home so to speak, having been in the business the better part of 3 decades.


All the best, and stay safe and well;

Paul

[pbmus]

33. No problemo...and you as well

[TreasonousBastard]

2. I was thinking of picking up a used short bus from the local bus company...

to turn into a camper. Know one of mechanics over there. and they sell them by calendar, not repair expense.

They are well maintained and the formula they use ends up with them selling for 5 grand for the standard school bus and 3 grand for the short one. We didn't get around to the big commuter and highway buses.

The point is that these are in excellent shape because they are maintained. Each company is different, but the ones with the burned out engines or bent frames usually go elsewhere.

So, from there we go to rental fleets-- same thing. The Enterprise lot down the road sells the good ones. Like new, maybe 30 grand on the clock. Some even still in original warranty (but not many).

[Throck]

4. Republicans already bought up all the short busses.

Sorry, they probably need them for their voters.

[PCIntern]

20. Great minds think alike...

I didn’t want to get a post alerted upon so I withheld my impulses

[Amishman]

24. Rental companies have lots of sub compacts, bring on the clown cars

[shanti]

29. Actually

I'm looking for a newer subcompact. Right now, my van is too big for the garage and I want to be able to park in the garage (and save the finish). The timing is just so...bad.

[lagomorph777]

11. It's also a great time to get a deal on a used airliner.

With American, Delta, and others drastically downsizing.

[TreasonousBastard]

12. That's how Donald got his.

[lagomorph777]

14. But then there were the upgrades: brass-plated handcuffs on the bed, etc

[mr_lebowski]

3. I'm not afraid of used rental cars especially, but a problem for me is selection/features ...

The cars that Hertz and all those companies buy are nearly always the most base of the base models.

Reason I buy used cars (always, never had a new car in my life) is so I can get an older model with all or most of the cool features for way less than it was new.

[Captain Zero]

34. Years ago I bought a used rental Buick Century with 26K miles

It was great up to 150k, some issues running it up to 210k.
But I bought it for 9k less than a new one at the time.

The thing is they may put 20-40k on them but they service them once a month or so.

[Cha]

5. That makes sense.. there are at least a thousand

rental cars parked like sardines in this empty cane field where I used to run before visitors stopped renting cars in March.

[mnhtnbb]

6. I bought a used Nissan Altima from Hertz

in the late1990's as my "snow" car when we lived in Nebraska. It had front wheel drive. Intended to keep it and let it become my oldest son's first car when he started driving. Then we moved to North Carolina, so I sold it and only brought my convertible here. When it snows here, I don't go out because too many of the locals have no idea how to drive in snow.

[mitch96]

7. I suppose it's not that bad for car makers.. In my area the prices haven't really gone down...

But the financing deals are good. When dealers and Mfg's start cutting the prices of cars then it's bad for them in my book.. From my reading car dealers make a bucket load of money on used cars. New car margins are slim compared to new. Again from what I've read in the auto trade magazines.. YMMV
m

[ooky]

10. I was driving a 15 year old car and decided to take advantage of this credit situation.

The price was decent too, but the credit offer is the reason I bought it. 72 months with no interest. It made sense for me because I was going to have to start taking RMD's from my 401K during this period anyway.

Plus, they brought me the car to my home so I never had to step foot into the dealership. It was the easiest car purchase I have ever made in my life.

My, how times have changed.

[mitch96]

16. "I never had to step foot into the dealership."

Between you and me this is the way it should be. Just like buying any item on line..
Look, do reasearch , get the price you want to pay and have it delivered by Fed Ex.. Oh that's right they don't deliver cars....
I despise auto dealerships. Their job is to remove as much money out of your wallet as they can.. And don't get me started on all those bullshit "dealer fees" and over priced services for doc stamps and license plates.... All bullshit. Look at the "temples to the auto industry" that these dealerships they work out of and tell me they don't make a bucket of money on every sale..
I go thru a buyer broker and never had a problem. The dealer tells you they they can beat the brokers price but they never have... YMMV. rant mode off...
m

[ooky]

19. I hear you.

I always do the price research on the car I want first, and my goal is to be at or near factory invoice. They still make money that way with their "hold back", and I do want their sales person to make a fair amount off the purchase, just not rip me off. Getting to my researched number and out the door afterward is always the nightmare. The worst part of buying a car is the "the dealer process". Making you go "meet the boss". After price negotiation, forcing you to listen to extended warranty, sealer, etc. pitches at the cost of thousands of extra dollars.

For this purchase I still had to take a phone call from "the boss", who tried to get me to pay for 3 grand more in bullshit extras. But this time I just set the phone down (on speaker) and continued what I was doing on my Ipad while he droned on for about 30 minutes. Then I politely said "no thanks" when he was done. A couple of times he asked me a question and I had to get him to repeat it.

I doubt I'll live long enough to ever need to buy another new car but if I do, I'll be doing it this way.

[shanti]

30. Which brokerage do you go with?

And what is their fee? I'm thinking about going this route.

[milestogo]

8. Make sure you ask for a manual and an extra set of keys.

I bought a rental 10 years ago and that was my only regret.

[ProfessorGAC]

9. They Were Dumping Exotics In April & May

Saw anniversary Corvettes at $55,000. Nearly 50¢ on the dollar.
But, I looked at their sales site.
The deals are NOT great given their financials.
Carmax is probably as good.

[Hugin]

13. If you plan on a purchase beware of the air bag issues...

Several million cars are on recalls wrt to complications with replacement. Used car sellers may be tempted to dump their problems off onto unsuspecting consumers.

[MineralMan]

15. Before buying a used rental car, check to make sure

the warranty will continue to be in force. In many cases, you'll discover that no factory warranty comes with the car, which was used commercially.

If that is the case, your nice shiny car might not be a real bargain in the long run.

[Amishman]

18. Advantage Rent A Car filed Ch. 11 right after Hertz

and there is a lot of talk of some of the other big rental car players having to sell off some assets to avoid bankruptcy as well.

If Hertz is unable to reach an agreement for bankruptcy financing in the next 60 days, the lienholders can force liquidation of their entire 770k car fleet. To give a little perspective, Cash For Clunkers removed 690k cars.

[TheBlackAdder]

21. Not onlt that, some car companies are trying to get leasers to keep their cars longer.

.

There are some car dealerships that are refusing to accept rental cars, against the terms of contract.

The dealers and manufacturers are boned because people want to get rid of their leased vehicles now, and there isn't a market to buy them. One thing is for certain, NEVER buy a vehicle that has a "Fleet", "Rental" or "Corporate" registration--they are often self-insured and any damage that happens to them, including flood and major collision, does not get reported to the car checking agencies. While a car may look good, you'll need an independent mechanic to inspect it first. Often, the oil is not changed, but just topped off, because they only need to get the cars to last a couple of years.

.

[Pompoy]

22. I bought a 2015 Nissan Altima in 2017 from Hertz

I used it to drive for Uber, I just paid it off a month ago and was planning to get something bigger, like an Impala this summer.
But I don't see driving for Uber again for quite a while since I'm older and overweight, and don't want to catch the covid.
So I will be skipping on another loan since I won't be Ubering, and won't take advantage of any deals that might be there.

But I liked the experience of buying from Hertz, since my credit card pre-approved me for a car loan, and since I'm retired and don't show much of an income, I was happy that Hertz didn't make me come up with paychecks and stuff like that to prove my income.

[MicaelS]

25. I will believe this when I see it.

I have been reading endless articles about used car prices dropping "soon", and I have not seen it. Same cars out there at the same prices in DFW.