What Happens to Unsold New Cars?

[lobotomyboy63]

While trying to find a definitive answer, I stumbled across this article from last November.

http://www.nytimes.com/2008/11/19/business/economy/19ports.html?pagewanted=1&_r=1

It seems the cars kept arriving but weren’t shipped to dealers because they weren’t selling. My WAG is that the OP’s question is becoming a more important distinction than ever.

[LiveOnAPlane]

I just wanted to thank everyone for some really, really interesting anecdotes and stories. I’ve been around for quite a while, but I sure learned some stuff from the replies to this post of mine.

Thanks!

[MsRobyn]

First of all, I disagree that rental cars are bottom-of-the-barrel stripped-down models. Many of the premium companies like Avis and Hertz have cars with nice features, because that’s how they distinguish themselves. Most of the cars I’ve rented were a lot nicer and more loaded than anything I’d buy for myself.

But another reason why auto companies tend to like rental agencies is because the rental agencies put people in brand-new cars. It’s sort of like a test drive, only it’s for at least a day instead of around the block. And by making the fancier features available, the manufacturers hope that new-car buyers will look for them or request them when the buyer is car-shopping.

[Balthisar]

@MsRobyn

First of all, I disagree that rental cars are bottom-of-the-barrel stripped-down models. Many of the premium companies like Avis and Hertz have cars with nice features, because that’s how they distinguish themselves. Most of the cars I’ve rented were a lot nicer and more loaded than anything I’d buy for myself.

Depends what you call bottom-of-the-barrel. To me a car with only air-conditioning and power-windows and -locks and -mirrors is a stripped-down model. This basic car represents the majority of the fleet of all rental agencies, including Hertz and Avis. It’s rare to get leather, or air conditioned seats, and impossible to get in-dash navigation (instead you get Hertz’ “NeverLost”, if you pay extra). If you upgrade to full-size or premium classes, then maybe you’ll get climate control instead of those awkward, manual air mixers.

But another reason why auto companies tend to like rental agencies is because the rental agencies put people in brand-new cars. It’s sort of like a test drive, only it’s for at least a day instead of around the block. And by making the fancier features available, the manufacturers hope that new-car buyers will look for them or request them when the buyer is car-shopping.

It’s actually rarer these days that auto companies like rental agencies to the extent that they used to. They’ve come to realize that the wide availability of used cars severely depresses their resale values, which affects the original transaction price. While this primarily hurt the American auto companies, it now affects the imports as well, because the Americans have pulled back on their fleet sales in a major way, in order to combat this affect. This means that the imports have to cut back as well, lest their resale values start to suffer in the long term. Now because everyone is cutting back (i.e., not loving the rental agencies), the fleet transaction prices are steadily climbing, meaning that we pay more for rentals (in general overall), and that we drive older rental cars (in general, overall).