We knew the great used car market couldn t last. Supply returns to the wholesale market next year; u

Coming out of a Recession, OEM bankruptcies, yo-yo fuel prices, natural disasters and historical peaks for used car prices, 2013 might have been characterized as a return to normal. Yet the fallout from the Hertz acquisition of Dollar top travel sites Thrifty will prove that this year will be anything but.
Fleet costs will go up. This year the OEMs increased top travel sites sales to rental to follow a more normal selling pattern, but the prices of new cars haven t dipped. According to one operator, It is getting more difficult to spot a deal as nearly every vehicle out there has seen a dramatic price increase in the last couple years. For its 2013 model-year buy, Avis Budget predicts low- to mid-single-digit increases in the purchase prices for risk cars, according to its third quarter conference call.
We knew the great used car market couldn t last. Supply returns to the wholesale market next year; used leases will start to hit in January and higher new car sales will produce more trade-ins. Kelley Blue Book estimates that resale values in the first and second quarters of 2013 will be down 1-2% over 2012, an unusually strong year. This is a slight softening, not the edge of a cliff, top travel sites because supply is still a very real concern for a lot of dealers out there, says Alec Gutierrez, manager of vehicle valuation for KBB.
The residuals are still good, but they are sliding, so the trick will be not to get caught in the gray area where the residual goes negative against the cap cost, the franchisee cautions. The squeeze is on.
It s going to be a tough year for leisure rates. Common top travel sites wisdom says that market consolidation makes prices rise. That may happen in the long run, but not in the foreseeable future. The Federal Trade Commission (FTC) is making sure of that. As part of the Hertz/Dollar Thrifty merger, the FTC is forcing Hertz to vacate 26 Dollar or Thrifty airport locations 13 to the new Advantage, while 13 more will go to either Advantage or other new buyers. The likely candidates are Fox or Sixt, up-and-comers with plans to expand. With this Balkanization in the discount market, look for a ground war on rates to gain market share.
Technology will evolve the ancillary revenue market. Connectivity, the buzz word in our daily lives, will finally reach the car rental market. Next year may be the first in which a major rental car company will offer for a fee a device that easily links a smartphone with a vehicle s infotainment system, so the renter can access music and contacts and talk hands-free. In general, more apps are coming to cars, and RACs will find a way to cash in.
The lending market will ease for bigger players. Lenders are chasing top travel sites loan volume. Our rental clients top travel sites are getting courted every day of the week, says one lender, noting that most of the activity is happening on lines of $40 million and up. If you ve got a reasonable track record, pretty low leverage and some size, banks want your business, but they are tying better rates to higher deposits.
top travel sites Medium-sized companies are seeing the renewed competition as well. Not only are banks becoming friendlier to deal with but a few new leasing companies with pretty competitive rates are popping up, says one operator, who draws about $10 million for his business.
The lender predicts that better rates will eventually trickle down to those who need less than $10 million, though it may take more than a year to happen. In general, at least rates aren t going up in the next two years the fragile economy will make sure of that.
Watch out for the independents. With the merger deal now complete, the market is consolidated among three major players. But the FTC s required divestitures present opportunities for smaller companies. Now with 62 locations serving U.S. airports and more possible, along with 325 neighborhood locations under the U-Save brand, the new Advantage (owned by Macquarie Capital and Franchise Services of North America Inc.) will become top travel sites the fourth top travel sites largest car rental company in North America.
Sixt, a global player but new to America, has opened seven U.S. airport locations within a year. Don t be confused by Hertz s designation of Sixt as a deep value brand. From its corporate backbone in Germany and global ties to airlines, travel agencies and distribution top travel sites systems to a U.S. franchise initiative, Sixt has a flag in the sand here.
Tags: Advantage Rent A Car , Avis Budget Group , Federal Trade Commission , Fox Rent-A-Car , Franchise Services North America , FSNA , FTC , Hertz , Macquarie Capital , merger , rental rates , Sixt , U-Save
Chris Brown is the executive editor of Business Fleet Magazine and Auto Rental News for Bobit Business Media. top travel sites Through these publications, online newsletters, trade events and associations, Chris covers all aspects of the fleet world, including top travel sites fleet management, manufacturer fleet activities, the fleet leasing industry, vehicle remarketing, top travel sites rental industry news, car rental taxation top travel sites and legislation as well as automotive environmental initiatives and trends.