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Maybe someone can explain in kindergarten terms for me -- A root cause of this problem is that the rental car companies sold off a lot of their fleets thinking

Maybe someone can explain in kindergarten terms for me -- A root cause of this problem is that the rental car companies sold off a lot of their fleets thinking that the pandemic would absolutely crater demand for >1 year. Am I misunderstanding? Those cars went somewhere -- they didn't go into the dump. Wherever those cars went, why are they not causing some cushion / surplus in a different place that relieves some shortage? They got locked up in a warehouse and are inaccessible? Sold off and can't be bought back? Reporters in their simplistic descriptions make it sound like those cars just evaporated.

gregwebs 5y ago
The car companies did the same, but what they did was cancel their slots for chip production while having little chip inventory. So yeah, the root is back to the car companies. The rental car companies probably would have been dealing with a much smaller problem from the overall car demand increase from their sell-off if the car companies had maintained their production capacities of their supply chains.
pandaman 5y ago
From my understanding, a used rental is just a couple of notches above the bottom of the market so people who bought those replaced their beaters and sent those to the junk yard. So they are not stored anywhere but are being used in place of the cars that went out of the market.
- davchana 5y ago
  Most of the rental cars come in as brand new; & usually gets sold between 3 years or 36000 miles. Any car at that stage is certainly not a beater. A beater (with regular usage) will be something like 10+ years old and or 200,000 miles or over. See the cars at enterprisecarsales.com , where most of the cars are Enterprise Rentals.
  - thomaslord 5y ago
    Some people may not consider it a beater, but rental cars get treated like absolute crap (regular gas even if they should get premium, traditional oil vs synthetic, renters beat them up because they don't care). If I were choosing between a rental car at 36,000 miles or a non-rental at 46,000 miles, I'd assume the non-rental would give me fewer problems in the short term and probably make it to a higher mileage in the end. Still better than the proverbial $500 Civic with 250,000 miles, 7 owners, and 3 accidents, but not great vehicles to own by any stretch of the imagination.
    - davchana 5y ago
      This, rental car is a car driven roughly, in mud, in rocks, with rash driving, rarely serviced or poorly serviced, poorly driven, in potholes, or quick acceleration or quick braking can not be further than truth How many times one rents a car for personal use v/s on official use or business use? Business use is way higher than personal use. Most of the people who rent it for business use, are reporting to their boss or some kind of supervisor; & if they thrash car, car company reports/charges damages, it will come back to the person who drove it. So, no, a majority of renters don't beat cars because they still will be on hook for damages. How many regular rentals need premium? None. Only exotic rentals might. Most of the rentals are run of the mill Toyota,Hyundai, Mitsubishi, mid size or mid range; the cars which are most of the time good for everyone. None of them needs premium. Although, this fuel thing exists. When I used to rent, I used to buy the cheapest fuel at any cheapest station. Now in own car,I go by only Shell Regular. Rental are new, & new cars are covered bumper to bumper for about 36000, transmission till 60,000. Yes, rental gets different drivers, but so do to some degree of non rental (family, friends, not common but still not zero). So, as stated above,a 36,000 miles in a rental is not much different than same in a non rental. In my opinion; there is a similar set of drivers who dont care for their own car, & almost most of them will not care for rental or friendly loaned too. People race their own cars, people floor their own cars. My personal experience; my used car came with all shop visit records; verifiable, from Ford's system. Yes, it had about 4000 miles more than projected 7 years 150,000 miles on projected line, but that gap is getting less everyday with my moderate use (1000miles a month). Rentals are beaten is a personal opinion. Any car can come out beaten. People who beat cars don't care if they rent it or own it. But beating a rental car might bite back quickly instead of beating one's own car.
- AnimalMuppet 5y ago
  Hardly "just a couple of notches above the bottom of the market". They tend to be rather new, high mileage for their age but not high mileage in the grand scheme of things, and maintained by professionals. They're just a couple of notches below brand new.
  - pandaman 5y ago
    Might be my luck then as all rentals I have rented did not look like they had been maintained at all, least by professionals (in car maintenance).
  - chucksta 5y ago
    For desirability they are definitely near the bottom of the market. Even if they have a meticulous maintenance schedule, it was almost certainly driven harder. And a in 1:1 private to rental car sale, the rental would be cheaper almost always. >A former rental may cost less money up front, but it will also return less money down the road. Getting maximum resale value for a used rental car is difficult, because many shoppers are wary of buying former rental vehicles, so much so that some states have passed laws allowing car dealerships to call rental cars "program cars" in hopes of avoiding the stigma. https://www.cargurus.com/Cars/articles/the_pros_and_cons_of_buying_a_rental_car https://www.cargurus.com/Cars/articles/the_pros_and_cons_of_...
    - bityard 5y ago
      I can see there being one or two downsides to buying a rental car, but "driven harder" is a weird one to me. First, almost all renters avoid abusing a rental car because they don't want to get charged for any damage. (Maybe the exception would be a sports car.) Second, I mean, unless they took it out to the track and spent a day going laps with it, cars these days are basically built to easily handle any kind of driving behavior you can get away with on public roads. What really kills cars are accidents and lack of maintenance. Neither are hard for a trained mechanic to detect.
      - josephcsible 5y ago
- rajup 5y ago
  From the article, rental companies would not keep cars beyond 40-50k miles, hardly a couple of notches above bottom.
asdff 5y ago
They sold them at a steep discount on the open market and presumably consumers desperate for a car at a good deal scooped them up. https://www.usatoday.com/story/money/cars/2020/06/19/hertz-enteprise-how-score-used-car-deal-rental-agencies/3198416001/ https://www.usatoday.com/story/money/cars/2020/06/19/hertz-e...
zdragnar 5y ago
Supply of cars, both new and used, is severely constrained, and the sell off from rental companies didn't make a dent in that. Right now, I know of dealerships that are selling new cars for ABOVE MSRP. I have gotten a half dozen offers from my local dealership to buy back the used truck they sold me for more than they had sold it to me for.
- dawnerd 5y ago
  I made money on my model 3 from just a year ownership. It’s wild.
  - AnimalMuppet 5y ago
    Wild indeed, and unsustainable. There's going to be a correction. What will the correction look like? It almost has to look like the price of cars crashing, doesn't it? It will start with new cars being overproduced, dropping in price, then used cars dropping. 2023 might be a good time to buy a car, if you can hold on until then...
    - dawnerd 5y ago
      Same with the housing market. I cashed in this last month on my house and just going to wait out a correction. Totally not sustainable.
      - deleted 5y ago
        [deleted]
      - gruez 5y ago
        sounds like shorting the market, which is tough because the market usually goes up. Even if you're right in assessing it's overvalued, if it doesn't crash in a reasonable amount of time, the bottom might still be higher than what you sold at.
    - throwaway0a5e 5y ago
      >What will the correction look like? It almost has to look like the price of cars crashing I really hope this happens harder/faster than inflation just so we get a couple years free of morons on the internet screeching about how their 4Runner holds value.
HWR_14 5y ago
> Am I misunderstanding? Cars disappear over time (they age, get in accidents, etc.) Due to production issues, the replacement construction of cars has dropped dramatically. The rental companies decided to get rid of their buffer with the expectation they would not be used during the pandemic. (Plus, rental companies age out cars naturally) However, given the limited new cars, they have not rebuilt their fleet as fast as possible.
sbierwagen 5y ago
I mean, in the steady-state, the United States consumes 16 million automobiles a year: https://www.goodcarbadcar.net/usa-auto-industry-total-sales-figures/ https://www.goodcarbadcar.net/usa-auto-industry-total-sales-... The population only grows ~2 million a year. Cars hit end of life, get wrecked, are destroyed by floods, etc. Also, car rental companies sold their fleets into the market after new car manufacturers slashed production, so fewer new cars were going out the door.
throwaway0a5e 5y ago
> Those cars went somewhere The driveways of people who couldn't buy new cars because #ChipShortage.
cascom 5y ago
Demand drivers: Regular fleet replacement of crashed/old cars + cars for people who used to take public transport + cars for people moving from city to suburbs/ country + strong economy/household wealth increasing demand Supply: - production curtailments (early COVID) - limited production (supply chain issues / chip shortage) = demand exceeding supply

gregwebs 5y ago

The car companies did the same, but what they did was cancel their slots for chip production while having little chip inventory. So yeah, the root is back to the car companies. The rental car companies probably would have been dealing with a much smaller problem from the overall car demand increase from their sell-off if the car companies had maintained their production capacities of their supply chains.

pandaman 5y ago

From my understanding, a used rental is just a couple of notches above the bottom of the market so people who bought those replaced their beaters and sent those to the junk yard. So they are not stored anywhere but are being used in place of the cars that went out of the market.

davchana 5y ago
Most of the rental cars come in as brand new; & usually gets sold between 3 years or 36000 miles. Any car at that stage is certainly not a beater. A beater (with regular usage) will be something like 10+ years old and or 200,000 miles or over. See the cars at enterprisecarsales.com , where most of the cars are Enterprise Rentals.
- thomaslord 5y ago
  Some people may not consider it a beater, but rental cars get treated like absolute crap (regular gas even if they should get premium, traditional oil vs synthetic, renters beat them up because they don't care). If I were choosing between a rental car at 36,000 miles or a non-rental at 46,000 miles, I'd assume the non-rental would give me fewer problems in the short term and probably make it to a higher mileage in the end. Still better than the proverbial $500 Civic with 250,000 miles, 7 owners, and 3 accidents, but not great vehicles to own by any stretch of the imagination.
  - davchana 5y ago
    This, rental car is a car driven roughly, in mud, in rocks, with rash driving, rarely serviced or poorly serviced, poorly driven, in potholes, or quick acceleration or quick braking can not be further than truth How many times one rents a car for personal use v/s on official use or business use? Business use is way higher than personal use. Most of the people who rent it for business use, are reporting to their boss or some kind of supervisor; & if they thrash car, car company reports/charges damages, it will come back to the person who drove it. So, no, a majority of renters don't beat cars because they still will be on hook for damages. How many regular rentals need premium? None. Only exotic rentals might. Most of the rentals are run of the mill Toyota,Hyundai, Mitsubishi, mid size or mid range; the cars which are most of the time good for everyone. None of them needs premium. Although, this fuel thing exists. When I used to rent, I used to buy the cheapest fuel at any cheapest station. Now in own car,I go by only Shell Regular. Rental are new, & new cars are covered bumper to bumper for about 36000, transmission till 60,000. Yes, rental gets different drivers, but so do to some degree of non rental (family, friends, not common but still not zero). So, as stated above,a 36,000 miles in a rental is not much different than same in a non rental. In my opinion; there is a similar set of drivers who dont care for their own car, & almost most of them will not care for rental or friendly loaned too. People race their own cars, people floor their own cars. My personal experience; my used car came with all shop visit records; verifiable, from Ford's system. Yes, it had about 4000 miles more than projected 7 years 150,000 miles on projected line, but that gap is getting less everyday with my moderate use (1000miles a month). Rentals are beaten is a personal opinion. Any car can come out beaten. People who beat cars don't care if they rent it or own it. But beating a rental car might bite back quickly instead of beating one's own car.
AnimalMuppet 5y ago
Hardly "just a couple of notches above the bottom of the market". They tend to be rather new, high mileage for their age but not high mileage in the grand scheme of things, and maintained by professionals. They're just a couple of notches below brand new.
- pandaman 5y ago
  Might be my luck then as all rentals I have rented did not look like they had been maintained at all, least by professionals (in car maintenance).
- chucksta 5y ago
  For desirability they are definitely near the bottom of the market. Even if they have a meticulous maintenance schedule, it was almost certainly driven harder. And a in 1:1 private to rental car sale, the rental would be cheaper almost always. >A former rental may cost less money up front, but it will also return less money down the road. Getting maximum resale value for a used rental car is difficult, because many shoppers are wary of buying former rental vehicles, so much so that some states have passed laws allowing car dealerships to call rental cars "program cars" in hopes of avoiding the stigma. https://www.cargurus.com/Cars/articles/the_pros_and_cons_of_buying_a_rental_car https://www.cargurus.com/Cars/articles/the_pros_and_cons_of_...
  - bityard 5y ago
    I can see there being one or two downsides to buying a rental car, but "driven harder" is a weird one to me. First, almost all renters avoid abusing a rental car because they don't want to get charged for any damage. (Maybe the exception would be a sports car.) Second, I mean, unless they took it out to the track and spent a day going laps with it, cars these days are basically built to easily handle any kind of driving behavior you can get away with on public roads. What really kills cars are accidents and lack of maintenance. Neither are hard for a trained mechanic to detect.
    - josephcsible 5y ago
rajup 5y ago
From the article, rental companies would not keep cars beyond 40-50k miles, hardly a couple of notches above bottom.

asdff 5y ago

They sold them at a steep discount on the open market and presumably consumers desperate for a car at a good deal scooped them up. https://www.usatoday.com/story/money/cars/2020/06/19/hertz-enteprise-how-score-used-car-deal-rental-agencies/3198416001/ https://www.usatoday.com/story/money/cars/2020/06/19/hertz-e...

zdragnar 5y ago

Supply of cars, both new and used, is severely constrained, and the sell off from rental companies didn't make a dent in that. Right now, I know of dealerships that are selling new cars for ABOVE MSRP. I have gotten a half dozen offers from my local dealership to buy back the used truck they sold me for more than they had sold it to me for.

dawnerd 5y ago
I made money on my model 3 from just a year ownership. It’s wild.
- AnimalMuppet 5y ago
  Wild indeed, and unsustainable. There's going to be a correction. What will the correction look like? It almost has to look like the price of cars crashing, doesn't it? It will start with new cars being overproduced, dropping in price, then used cars dropping. 2023 might be a good time to buy a car, if you can hold on until then...
  - dawnerd 5y ago
    Same with the housing market. I cashed in this last month on my house and just going to wait out a correction. Totally not sustainable.
    - deleted 5y ago
      [deleted]
    - gruez 5y ago
      sounds like shorting the market, which is tough because the market usually goes up. Even if you're right in assessing it's overvalued, if it doesn't crash in a reasonable amount of time, the bottom might still be higher than what you sold at.
  - throwaway0a5e 5y ago
    >What will the correction look like? It almost has to look like the price of cars crashing I really hope this happens harder/faster than inflation just so we get a couple years free of morons on the internet screeching about how their 4Runner holds value.

HWR_14 5y ago

> Am I misunderstanding? Cars disappear over time (they age, get in accidents, etc.) Due to production issues, the replacement construction of cars has dropped dramatically. The rental companies decided to get rid of their buffer with the expectation they would not be used during the pandemic. (Plus, rental companies age out cars naturally) However, given the limited new cars, they have not rebuilt their fleet as fast as possible.

sbierwagen 5y ago

I mean, in the steady-state, the United States consumes 16 million automobiles a year: https://www.goodcarbadcar.net/usa-auto-industry-total-sales-figures/ https://www.goodcarbadcar.net/usa-auto-industry-total-sales-... The population only grows ~2 million a year. Cars hit end of life, get wrecked, are destroyed by floods, etc. Also, car rental companies sold their fleets into the market after new car manufacturers slashed production, so fewer new cars were going out the door.

throwaway0a5e 5y ago

> Those cars went somewhere The driveways of people who couldn't buy new cars because #ChipShortage.

cascom 5y ago

Demand drivers: Regular fleet replacement of crashed/old cars + cars for people who used to take public transport + cars for people moving from city to suburbs/ country + strong economy/household wealth increasing demand Supply: - production curtailments (early COVID) - limited production (supply chain issues / chip shortage) = demand exceeding supply