Enterprise Rent-A-Car, the nation's largest rental company, expects to buy 400,000 new vehicles in the 2009 model year. That's about half the total of recent years, spokesman Patrick Farrell said. The figure covers rental cars bought for the Enterprise, National and Alamo brands.
Farrell said Enterprise now keeps its rental vehicles in service for an average of 13 months, up from 11 months.
"This is about the economy, the impact it's having on our industry and the way we have to react to maintain our financial strength," Farrell told Automotive News.
Enterprise is one of General Motors' largest customers. In past years, Enterprise bought as many as 200,000 vehicles from GM. Farrell said Enterprise is buying fewer vehicles from GM this model year, but he declined to be specific.
Historically, rental companies have bought 15 percent of new cars and trucks built by GM, Ford Motor Co. and Chrysler LLC, says John Healey, a rental industry analyst at FTN Midwest Securities Corp. in Cleveland.
Too often, the auto companies have said, rental cars and trucks flooded the used-vehicle market once they left service, depressing prices and residual values. So in recent years, the Detroit 3 have reduced their sales to the rental fleets.
Automakers especially have curbed sales of "program" cars and trucks, which automakers buy back and market as used vehicles once they leave rental service.
At the same time, the car companies are trying to get rental companies to buy more "risk" vehicles, which the rental companies must remarket themselves.
Mark Mathews, GM's director of used-vehicle activities, says the company expects to sell 450,000 2009-model vehicles to rental companies, down from 585,000 in 2008 and 600,000 in 2007.
Chrysler LLC's sales to rental companies declined 30 percent last year from 2007, spokesman Stuart Schorr says. Schorr declined to disclose Chrysler's unit rental sales or to offer a forecast for 2009.
Ford did not respond to requests for comment.
Even though automakers are offering rental companies better deals on many new vehicles, Hertz Car Rental isn't taking advantage of them, spokesman Rich Broome says. Hertz, the No. 2 car rental company, maintains about 300,000 vehicles in its U.S. fleet. Broome says the company is likely to cut back on new-vehicle purchases this year.
"It's going to be tough when rental demand is falling and the used-car market is so weak," he says.
"If current demand trends hold, it is likely that we will purchase fewer cars and hold onto cars a little longer than in the past."