Topic: A question for the Car and Econ Tards. What is a fair price for a used rental car?
Posted by .
Unregistered


Rumors abound that a large number of rentals are going to get dumped into the used car supply chain. How should the market place value these vehicles?

This is an odd time. New car sales have stalled, but the dealers are not making any big offers. Used car prices are reported to be strong.

A couple months ago I looked at what Enterprise was offering. They were asking dealer blue book retail for used rentals. I was thinking that auction price was more realistic.

Remember that Carfax will note that these cars were in rental use, this could damage future resale or trade in.

When these cars are sold through dealers they are called "Program cars"

Therefore, given the times, what is a fair price for a car from Hertz, National or other Rental outfit?


Posted by Fudster
Unregistered


Do you need one this week?

If not, just wait it out a few months. The prices are going to drop like a rock.

If you need one this week, rent one until the prices drop. The price drops will more than make up for the rental costs until then.

Car prices are going to suffer the largest drop in recorded history this year.


Posted by .
Unregistered


I noticed car prices haven't budged at all. I checked last week. There weren't any sales or specials. :lol:


Posted by .
Unregistered


This is an odd times. The car dealers and manufactuers are betting on a sharp V recovery


Posted by .
Unregistered


Fudster said: Do you need one this week?

If not, just wait it out a few months. The prices are going to drop like a rock.

If you need one this week, rent one until the prices drop. The price drops will more than make up for the rental costs until then.

Car prices are going to suffer the largest drop in recorded history this year.

Why do you think this will happen? I am curious about how you think the market will react.


Posted by .
Unregistered


Auctions have been largely closed, so many used dealers don't have a normal supply of used inventory.  Similarly, many brand name dealerships have not been willing to accommodate lease returns, which has closed off another supply of better quality used car inventory.  With auctions closed, a key method of price discovery has temporarily broken.

Summary  - there are relatively few used cars entering the market, so some independent lots don't want to sell what they have for anything less that a generous price, since they may not easily be able to get a replacement unit for their lot.  The auction data has dried up (at least in some areas), so no one really knows what the current price of anything is.

In a few months, I expect lots of supply to hit the market (postponed lease turn ins, repos that have missed several months of payments, rental fleets) which would tend to drive prices down.  I also expect fewer buyers will qualify for credit at all, or will only get crappy, rapey loans, which will keep some of them out of the market.  

Lots of inventory plus fewer buyers should lead to lower prices, especially at the higher end of the market.

The low end of the market may be different...if your 3 year old Denali got repoed, and the public transit in your town is still runnning a reduced schedule, and is still seen as dangerous, you'll be looking at the $2,000 hoopty.  That end of the market may not see much damage.


Posted by .
Unregistered


OP, do as someone else has suggested and WAIT.  But do NOT even consider an ex-rental for the following reasons:

1.  Rental companies take new vehicles and dispose of them at between 9 - 12 months old.  So you'd be buying a nearly new vehicle BUT that doesn't have any warranty, and has had 1,000 different idiot drivers.
2.  Rental companies don't sell direct to the public.  Their vehicles will be disposed of directly to commercial auction houses and bought by dealers.
3.  By the time they filter down onto the domestic market the price will be no cheaper than any other second hand car.
4.  If you WAIT six months you'll find that brand new cars are being discounted like crazy (the closer to December you get, the bigger the discounts).  Buy a brand new one for the same, or less, than an ex-Hertz SHITHEAP. 

Thank me later.


Posted by .
Unregistered


^

Hertz and Enterprise sell direct to the public in some cities (at least, they did before Covid).  With an ex-rental, you at least know that it got basic maintenance, like oil changes.  On the other hand, a certain percentage of the drivers drove it like they were auditioning for GTA, and minor to moderate damage on rentals often gets repaired in-house and doesn't end up on a Carfax-type report.


Posted by .
Unregistered


A fair price is always the intersection of what you will pay and what the seller will accept.


Posted by .
Unregistered


. said: Auctions have been largely closed, so many used dealers don't have a normal supply of used inventory.  Similarly, many brand name dealerships have not been willing to accommodate lease returns, which has closed off another supply of better quality used car inventory.  With auctions closed, a key method of price discovery has temporarily broken.

Summary  - there are relatively few used cars entering the market, so some independent lots don't want to sell what they have for anything less that a generous price, since they may not easily be able to get a replacement unit for their lot.  The auction data has dried up (at least in some areas), so no one really knows what the current price of anything is.

In a few months, I expect lots of supply to hit the market (postponed lease turn ins, repos that have missed several months of payments, rental fleets) which would tend to drive prices down.  I also expect fewer buyers will qualify for credit at all, or will only get crappy, rapey loans, which will keep some of them out of the market.  

Lots of inventory plus fewer buyers should lead to lower prices, especially at the higher end of the market.

The low end of the market may be different...if your 3 year old Denali got repoed, and the public transit in your town is still runnning a reduced schedule, and is still seen as dangerous, you'll be looking at the $2,000 hoopty.  That end of the market may not see much damage.

Thank you for a well thought out and logical response



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