Rental car slowdown adds to US automaker woes

Automobile manufacturers in the US have relied on sales to car rental companies to add revenue and raise cash, but with the slowdown in the rental business as a result of the weakened economy, it is becoming more difficult for the Big Three automakers to sell off their excess vehicles.

“For a long time fleet sales have served as a pressure valve for U.S. automakers,” noted the president of Vehicle Replacement Consulting Group, Michael Kane. “These sales gave the automakers an easy place to unload inventory and smooth out their herky-jerky production.”

He added: “Now they have been hit by a triple whammy.”

The continuing economic slowdown in the US means that there are fewer people travelling and, thereby, fewer people needing car rentals, particularly at airports.

“Business is down for everybody. It’s just a matter of degree,” noted Patrick Farrell, the vice president of corporate communications at Enterprise Rent-A-Car – which is the largest car rental operator in the US. “The airport business is being hurt, which has an impact on people who rent cars.”

The credit crunch is making it harder for rental car companies to sell off their used vehicles to customers, who are finding it more difficult to obtain loans. As resale values of many US vehicles have fallen, when the companies do sell the cars, they are getting less money for them.

Thanks to www.guardian.co.uk for the above quotes, for more information on this article please visit their website.

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