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> As for the article blaming their fleet for sticking with sedans for too long, to me as a European traveler, this is a feature. One time, I rented from a diffe

> As for the article blaming their fleet for sticking with sedans for too long, to me as a European traveler, this is a feature. One time, I rented from a different company, which "generously" stuck me with some monster SUV, and I mostly hated the experience. I also like sedans, particularly small ones that don't use much fuel. And all of the rental companies have sedans in their fleets. The issue is that they depreciate quickly because of Americans' preferences for trucks and SUVs. I'm gonna make up some numbers here, but they illustrate the point. A Toyota Tacoma that costs $30,000 new might retain 75% of it's value after 3 years and 30,000 miles (these numbers are approximate). So you sell it for $22,500 and you take a $7,500 depreciation hit. Meanwhile, an Hyundai Elantra that costs $21,000 retains 55% of it's value over that same period, so you can sell it for $11,500 and take a $9,450 depreciation hit. As a general rule, trucks seem to retain their value very well, followed by SUVs and then sedans (at least in the US). Luxury sedans devalue the most. The issue that Hertz had is that they bought a bunch of sedans and then the market preference shifted heavily to SUVs (with oil prices being low). So their initial calculations showed that they'd be able to sell their cars on the used market for price $X, but then they ended up being worth a lower amount, $Y, when consumer preferences shifted.

microtherion 6y ago
Thanks for the explanation! This seems very plausible to me, but I wonder why that is so. I can understand trucks retaining their value, as there is a clientele who drives them for utilitarian reasons (though not necessarily the ones who buy them new). I can understand why luxury sedans devalue quickly, as they are bought for prestige. But it is not self evident to me why SUVs would have superior utilitarian value to regular sedans.
- L_Rahman 6y ago
  They do not. The higher price for the SUV is a product of American market preferences for SUVs that have nothing to do with utility and everything to do with branding and self-image.
- chadash 6y ago
  There's nothing self-evident about it :) Crude oil was going for $113/barrel in 2014 (which is likely around the time that Hertz made the decision to buy sedans) and then went down to less than half of that a year later. While the price has fluctuated since then, the prices have remained fairly low. Meanwhile, Americans like SUVs for reasons that I don't fully understand, but it's just a fact. And when gasoline is cheap, it doesn't cost that much more to buy one, so demand is high, and therefore resale prices go up (at least compared to sedans).

microtherion 6y ago

Thanks for the explanation! This seems very plausible to me, but I wonder why that is so. I can understand trucks retaining their value, as there is a clientele who drives them for utilitarian reasons (though not necessarily the ones who buy them new). I can understand why luxury sedans devalue quickly, as they are bought for prestige. But it is not self evident to me why SUVs would have superior utilitarian value to regular sedans.

L_Rahman 6y ago
They do not. The higher price for the SUV is a product of American market preferences for SUVs that have nothing to do with utility and everything to do with branding and self-image.
chadash 6y ago
There's nothing self-evident about it :) Crude oil was going for $113/barrel in 2014 (which is likely around the time that Hertz made the decision to buy sedans) and then went down to less than half of that a year later. While the price has fluctuated since then, the prices have remained fairly low. Meanwhile, Americans like SUVs for reasons that I don't fully understand, but it's just a fact. And when gasoline is cheap, it doesn't cost that much more to buy one, so demand is high, and therefore resale prices go up (at least compared to sedans).