Rental car companies are feeling the effects of the credit crunch and reductions in consumer and business travel, cutting their annual vehicle purchases from 1.9 million units in 2007 to 1.5 million in 2008.
The president of the American Car Rental Association, Robert Barton, described his industry as "paralyzed" by the current economic recession citing the inability to borrow money to finance inventory as well as difficulty disposing of retired vehicles at auction.
Because the Detroit Big Three have traditionally depended on the rental car industry to purchase their excess inventory, the contraction in rental car purchases further damages the already deeply damaged American automotive industry.
A spokesman for Enterprise Rent-A-Car, Patrick Farrell, quoted by Automotive News, said that his company would buy about 400,000 vehicles in the 2009 model year, approximately 50 percent less than last year. Enterprise is the largest rental company in the nation.
Additionally, the company is keeping vehicles in service on average 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," said Farrell.
Hertz Car Rental, which maintains a fleet of approximately 300,000 vehicles, is also expected to cut back on purchases for the year. Spokesman Rich Broome said, "It's going to be tough when rental demand is falling and the used-car market is so weak. 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."
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