I’m willing to accept the premise as true, as it was reported by a friend I’ve known for 20 years, who tends toward precision in all matters (and her job is as an auditor). So the question becomes: where is the arbitrage here?
Her company periodically sends her to their corporate HQ, about 200 miles away from her. But the only place she can rent a car is thirty miles in the opposite direction. So it’s apparently so much cheaper to pay for her car rental that they pay her mileage to drive that 60 miles round trip, which actually makes her overall round trip driving (including driving the rental car) 520 miles instead of 400.
So if the rental car company can come in with such a “low bid” and still make a profit, then someone in the system has to be consistently overpaying (and it’s apparently not the rental car customer).
Mileage reimbursement is, in theory at least, neutral: paying you the amount of money you lose (over the long run) by driving a mile: including your fuel, maintenance, and reduction in the vehicle’s value above and beyond what it loses with time; but not providing you a profit. So my “Bayesian prior” (call it a hunch if you prefer) is that the 55 cents/mile she says is set by the IRS is too generous, for a trip with mostly highway miles in particular.*
But let’s say that’s not the case, that they are reimbursing mileage accurately. The only other explanation I can think of for how rental companies can be making profits, while charging significantly less than the mileage reimbursement amount to their rental customers, is that they are getting some kind of arbitrage in the late-model used car market: buying cars for much less than they are worth, then selling them for more than their real value. It seems unlikely to me, though, that they are able to do this consistently better than big used car lots and wholesalers who focus on this market exclusively. And in fact, it would mean that they are conducting rentals as a weird and pointless loss leader: they’d be better off just buying and selling cars (maybe storing them a while if that’s part of the trick somehow) rather than wasting money on renting prime lot space at airports, not to mention the rental counter itself and all the employees who manage checking cars in and out. And then of course there’s the liability: risk of theft and damage.
My friend prefers this arrangement despite it costing her an extra 120 miles of driving, because she puts a very high premium on reducing the wear and tear on her car. But if I’m right, she should actually be eager to drive her own vehicle and get the mileage instead. (Unless, I guess, she hates the process of trading in a car and haggling over a new one so much that it is worth a lot to her to put that off as long as possible.)
*It would be more complicated, but more accurate, for mileage reimbursement to factor in how much stop-and-go driving there is, maybe by paying a lower rate per mile but also paying a “bonus” (“penalty”?) for each stop–which was not feasible for many years but would now be easy with a GPS device.