How are cars bought and allocated?
Dec 8, 2018, 2:43 am
#1
Original Poster
Join Date: Oct 2016
Posts: 3,703
How are cars bought and allocated?
With all the fleet turnover due to one-way rentals, you would assume that all National locations would generally have a similar selection of cars. But each location seems to have something different. For example DCA's fleet is always mostly boring garden variety Altimas and Hyundais, Newark's is similarly bland, PIT's is more diverse but with a disproportionate number of Grand Caravans, etc.
So how are cars ordered and allocated to locations? Do individual branch managers get to choose the cars? Or are they assigned at corporate HQ? Any insider knowledge would be interesting.
So how are cars ordered and allocated to locations? Do individual branch managers get to choose the cars? Or are they assigned at corporate HQ? Any insider knowledge would be interesting.
Dec 8, 2018, 6:01 am
#2
Join Date: Jul 2013
Location: Gulf Coast
Programs: Hilton Honors Lifetime Diamond; National Car Rental Executive Elite
Posts: 2,320
I share your curiosity on this topic.
I frequent PNS and they recently had a change in managers from what I’ve heard. Complementary upgrades are all but gone and the fleet has definitely become more bland.
In 2017, it wasn’t odd to find BMWs (3, 4, and 7), ample supply of Suburbans, an occasional Volvo or Audi, and loaded Fusions, Grand Cherokees, Maximas, etc. in the lot.
Since mid-summer, the the fleet is stale Impalas, Sonatas, etc. I had a Charger this week, but it had cloth seats and a ton of miles.
I frequent PNS and they recently had a change in managers from what I’ve heard. Complementary upgrades are all but gone and the fleet has definitely become more bland.
In 2017, it wasn’t odd to find BMWs (3, 4, and 7), ample supply of Suburbans, an occasional Volvo or Audi, and loaded Fusions, Grand Cherokees, Maximas, etc. in the lot.
Since mid-summer, the the fleet is stale Impalas, Sonatas, etc. I had a Charger this week, but it had cloth seats and a ton of miles.
Dec 8, 2018, 11:20 pm
#3
Join Date: Aug 2005
Posts: 375
From what I've seen, you see primarily 2 things.
1) Cars that Enterprise Holdings can get a great deal on in bulk as fleet vehicles
2) Cars that will sell well after serving their time as rental fleet vehicles.
A lot of the cars you see are there because the rental car company can get them cheap (see point 1). This could be due to overproduction by the vehicle manufacturers, less demand than expected, or a variety of other market factors that make the manufacturer want to get rid of the cars at or slightly above cost.
The other cars (see point 2) are there because they will likely sell well in the area they were originally plated in. Sure, there's some fleet movement with one-ways that occasionally mess up their plans when it's time to take the vehicles out of the rental fleet, but generally speaking, it probably evens itself out enough that it's not a huge problem. Enterprise car sales also gives buyers the option to ship cars from other locations (like Carmax with a transfer fee). You will notice as well that most vehicles classed above luxury aren't even reservable to one-way to another location. Even luxury is only reservable 10-20% of the time on a one-way rental. They like to keep these higher end vehicles in markets where they can get the highest amount of rental revenue and the highest after market sales price after their time as rentals is over.
Another reason you might see weird vehicles are due to franchised locations. Anyone who has rented in Montana or Idaho from National knows that their vehicles are definitely not always representative of the rest of the National fleet. If you want a Toyota 4 Runner or a Subaru, you'll likely be able to find one up there. This of course, is because it's easier for them to sell these types of vehicles aftermarket in those areas.
1) Cars that Enterprise Holdings can get a great deal on in bulk as fleet vehicles
2) Cars that will sell well after serving their time as rental fleet vehicles.
A lot of the cars you see are there because the rental car company can get them cheap (see point 1). This could be due to overproduction by the vehicle manufacturers, less demand than expected, or a variety of other market factors that make the manufacturer want to get rid of the cars at or slightly above cost.
The other cars (see point 2) are there because they will likely sell well in the area they were originally plated in. Sure, there's some fleet movement with one-ways that occasionally mess up their plans when it's time to take the vehicles out of the rental fleet, but generally speaking, it probably evens itself out enough that it's not a huge problem. Enterprise car sales also gives buyers the option to ship cars from other locations (like Carmax with a transfer fee). You will notice as well that most vehicles classed above luxury aren't even reservable to one-way to another location. Even luxury is only reservable 10-20% of the time on a one-way rental. They like to keep these higher end vehicles in markets where they can get the highest amount of rental revenue and the highest after market sales price after their time as rentals is over.
Another reason you might see weird vehicles are due to franchised locations. Anyone who has rented in Montana or Idaho from National knows that their vehicles are definitely not always representative of the rest of the National fleet. If you want a Toyota 4 Runner or a Subaru, you'll likely be able to find one up there. This of course, is because it's easier for them to sell these types of vehicles aftermarket in those areas.
Dec 15, 2018, 1:45 pm
#5
Join Date: Nov 2009
Programs: National Exec, HA Pualani Gold
Posts: 599
Disclaimer: this is based on what I've read, not because I'm in this industry.
Almost every manufacturer has a fleet & corporate sales division. For example, Toyota Fleet. Most of these sales to rental car companies are done under a "risk" or a "repurchase" agreement.
A repurchase program is where they will buy back the vehicle from the fleet operator with a fixed depreciation amount provided the vehicle is returned within a set period of time, mileage, and condition. For example, a fleet operator buys a Corolla for $20K and the fixed depreciation is $250 per month for 24 months under a repurchase program. After 24 months, the fleet operator returns the Corolla to Toyota and gets a check back for $14K ($20K - $6K depreciation). Very low risk to fleet operator since they are really on the hook just for the minimum amount of months they have to keep the vehicle multiplied by the fixed depreciation.
The catch is that you have to buy in volume. So these are probably the models we see across the EAN fleet.
Also, this is the area in recent years that many manufacturers started to reduce along with cheap retail leases. If you look at Toyota's fleet site, you'll also see that their repurchase program only offers certain models with certain configurations and even only in certain color combinations (e.g. you have to buy a mix of 30% white, 40% silver, 30% grey).
A risk program is essentially where the fleet operator takes the risk of ownership. These are the vehicles they sell through a used car arm, such as Enterprise Car Sales. One reason to go with the risk program is if you think you can sell the vehicles for more than you'd get back under the repurchase program -- vehicles with high resale value, for example. Another reason would be if you keep the vehicles longer than typically allowed under a repurchase program (which could be the case for EAN given how vehicles cycle through the various brands where you're sitting in a 3-year old Ford Focus with 40K miles at your local Enterprise).
Honda is probably the main exception -- my understanding is that they don't have a national fleet division. However, it doesn't mean the individual dealers can't sell to fleets. In Hawaii, the local dealers supply various Honda models to EAN. I believe they are on a repurchase program, as they usually end up being sold as used vehicles by the dealers a couple years later. Same thing with Toyotas in Hawaii, which are sold by the local distributor and not Toyota North America. Only certain models are in the fleet (Corolla, Camry, Prius), typically all base models, and they end up a couple years later being sold by the local Toyota dealers as used vehicles.
With the exception of the Hondas and Toyotas in the Hawaii fleet, however, it seems like the same makes, models, and trims that are spotted in other regions are the same ones that appear here. For example, when higher trim Nissans began appearing, they also appeared in the Hawaii fleet. So I'd guess most of the fleet decisions are made at a (no pun intended) national level and it's more a question of distribution by region (e.g. sending more convertibles to Hawaii, California, and Florida while sending more AWD models to the northeast).
Almost every manufacturer has a fleet & corporate sales division. For example, Toyota Fleet. Most of these sales to rental car companies are done under a "risk" or a "repurchase" agreement.
A repurchase program is where they will buy back the vehicle from the fleet operator with a fixed depreciation amount provided the vehicle is returned within a set period of time, mileage, and condition. For example, a fleet operator buys a Corolla for $20K and the fixed depreciation is $250 per month for 24 months under a repurchase program. After 24 months, the fleet operator returns the Corolla to Toyota and gets a check back for $14K ($20K - $6K depreciation). Very low risk to fleet operator since they are really on the hook just for the minimum amount of months they have to keep the vehicle multiplied by the fixed depreciation.
The catch is that you have to buy in volume. So these are probably the models we see across the EAN fleet.
Also, this is the area in recent years that many manufacturers started to reduce along with cheap retail leases. If you look at Toyota's fleet site, you'll also see that their repurchase program only offers certain models with certain configurations and even only in certain color combinations (e.g. you have to buy a mix of 30% white, 40% silver, 30% grey).
A risk program is essentially where the fleet operator takes the risk of ownership. These are the vehicles they sell through a used car arm, such as Enterprise Car Sales. One reason to go with the risk program is if you think you can sell the vehicles for more than you'd get back under the repurchase program -- vehicles with high resale value, for example. Another reason would be if you keep the vehicles longer than typically allowed under a repurchase program (which could be the case for EAN given how vehicles cycle through the various brands where you're sitting in a 3-year old Ford Focus with 40K miles at your local Enterprise).
Honda is probably the main exception -- my understanding is that they don't have a national fleet division. However, it doesn't mean the individual dealers can't sell to fleets. In Hawaii, the local dealers supply various Honda models to EAN. I believe they are on a repurchase program, as they usually end up being sold as used vehicles by the dealers a couple years later. Same thing with Toyotas in Hawaii, which are sold by the local distributor and not Toyota North America. Only certain models are in the fleet (Corolla, Camry, Prius), typically all base models, and they end up a couple years later being sold by the local Toyota dealers as used vehicles.
With the exception of the Hondas and Toyotas in the Hawaii fleet, however, it seems like the same makes, models, and trims that are spotted in other regions are the same ones that appear here. For example, when higher trim Nissans began appearing, they also appeared in the Hawaii fleet. So I'd guess most of the fleet decisions are made at a (no pun intended) national level and it's more a question of distribution by region (e.g. sending more convertibles to Hawaii, California, and Florida while sending more AWD models to the northeast).
Last edited by qs933; Dec 15, 2018 at 1:50 pm
Dec 16, 2018, 5:41 pm
#6
Join Date: Dec 2014
Location: Everett,WA
Programs: Hertz President Circle, National Executive Elite.
Posts: 85
A little insight.
Majority of the cars are purchased by demand during certain seasons, i.e. heavy introduction of mini-vans before the summer. It does have to do heavily on the cost of the unit vs the cost of maintenance ect, which is why Grand Caravans are the workhorses of mini-vans, cheap , versatile, and easy to maintain. Our fleet is heavily Nissian/GM/Ford/FCA/ Kia motors, simply because like any other business, supply and demand. Those odd balls that you see every once and a while do general come from franchisee locations or auction cars. I learned that this happens through every company. 9/10 a fleet car may have jumped through more than one or two companies before its retired. A great example is at Hertz the car class "L4" encases 7 passenger crossovers like the pathfinder, but 2WD models as classed as K6, and in the south I seem to find more K6 and few L4's, and when I do they generally come from the colder regions, whereas in the PNW there are very slim pickings for K6.
Majority of the cars are purchased by demand during certain seasons, i.e. heavy introduction of mini-vans before the summer. It does have to do heavily on the cost of the unit vs the cost of maintenance ect, which is why Grand Caravans are the workhorses of mini-vans, cheap , versatile, and easy to maintain. Our fleet is heavily Nissian/GM/Ford/FCA/ Kia motors, simply because like any other business, supply and demand. Those odd balls that you see every once and a while do general come from franchisee locations or auction cars. I learned that this happens through every company. 9/10 a fleet car may have jumped through more than one or two companies before its retired. A great example is at Hertz the car class "L4" encases 7 passenger crossovers like the pathfinder, but 2WD models as classed as K6, and in the south I seem to find more K6 and few L4's, and when I do they generally come from the colder regions, whereas in the PNW there are very slim pickings for K6.