Rental companies are buying up used cars as chip crisis deepens
The car crunch is a boon for rental companies, which can probably rent out every car they own at much higher rates than they charged before the pandemic.
Vehicle rental companies including Hertz, Dollar and Budget are listed on a sign at a parking garage in Arlington, Va.
The semiconductor shortage has slashed vehicle production so much that rental-car companies cannot get the new cars they need, so they have resorted to buying used vehicles at auction.
This is uncharted territory for the likes of Hertz and Enterprise, which have made their profits by purchasing new vehicles cheaply in bulk, renting them out for as much as a year and selling them at auction. In the past, they have bought some used cars to shore up an occasional unforeseen burst in demand, but rarely for the mainstays of their fleets.
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The semiconductor shortage has slashed vehicle production so much that rental-car companies can’t get the new cars they need, so they have resorted to buying used vehicles at auction.
This is uncharted territory for the likes of Hertz and Enterprise, which have made their profits by purchasing new vehicles cheaply in bulk, renting them out for as much as a year, and selling them at auction. In the past, they have bought some used cars to shore up an occasional unforeseen burst in demand, but rarely for the mainstays of their fleets.
“You would never go into auction to buy routine sedans and SUVs,” said Maryann Keller, an independent consultant who used to be on the board of Dollar Thrifty Automotive Group, which is now part of Hertz. “These are special circumstances. There is a shortage of cars.”
Rental cars are stored in a parking lot at a stadium in Los Angeles.
The semiconductor shortage has slashed vehicle production so much that rental-car companies can’t get the new cars they need, so they have resorted to buying used vehicles at auction.
This is uncharted territory for the likes of Hertz Global Holdings Inc. and Enterprise Holdings Inc., which have made their profits by purchasing new vehicles cheaply in bulk, renting them out for as much as a year and selling them at auction. In the past, they have bought some used cars to shore up an occasional unforeseen burst in demand, but rarely for the mainstays of their fleets.
Rental Companies Buy Up Used Cars as Chip Crisis Get Worse
Bloomberg 4 hrs ago David Welch
(Bloomberg) The semiconductor shortage has slashed vehicle production so much that rental-car companies can’t get the new cars they need, so they have resorted to buying used vehicles at auction.
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This is uncharted territory for the likes of Hertz Global Holdings Inc. and Enterprise Holdings Inc., which have made their profits by purchasing new vehicles cheaply in bulk, renting them out for as much as a year and selling them at auction. In the past, they have bought some used cars to shore up an occasional unforeseen burst in demand, but rarely for the mainstays of their fleets.
Rental car agencies rush to build back fleets by buying used cars Autoblog 5/3/2021 Bloomberg
Rental cars stored on the parking lot of Dodger Stadium in May 2020 in Los Angeles. They were sold off as the pandemic hurt the travel industry. (AP)
The semiconductor shortage has slashed vehicle production so much that rental-car companies can’t get the new cars they need, so they have resorted to buying used vehicles at auction.
This is uncharted territory for the likes of Hertz Global Holdings Inc. and Enterprise Holdings Inc., which have made their profits by purchasing new vehicles cheaply in bulk, renting them out for as much as a year and selling them at auction. In the past, they have bought some used cars to shore up an occasional unforeseen burst in demand, but rarely for the mainstays of their fleets.