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From business trips to vacation or holiday travel, renting a car or truck always coincides with some sort of unique occasion, and these events offer drivers the opportunity to log valuable seat time in models that may find their way on to, or off of, auto shopping lists in future. Just a few short years ago, however, rental options were largely limited to a half-dozen or so domestic models, whose bland styling, limited optional equipment and inoffensive (primarily white) color stood little chance of leaving a positive impression on renters.

Limited retail demand combined with an inability to make meaningful cuts to production led to an overflowing surplus of domestic-made cars. U.S. automakers were able to deal the excess stock to rental companies by drastically reducing prices and agreeing to repurchase and resell their rolling appliances after they had served relatively short stints in fleet service.

But over the past several years, bankruptcies, restructurings and more importantly, better product, have altered the composition of rental fleets. Generally speaking, domestic automakers are less dependent on rental companies to absorb surplus supply, and as a result, the share of new vehicle volume placed into rental fleets has fallen sharply. For context, domestic brand share of total rental registrations hovered around 80 percent back in the early 2000s; this means that 8 out of 10 vehicles in a rental fleet were the progeny of a Detroit-based brand. Over the past couple of years, however, domestic share of rental registrations has fallen below 70 percent and year-to-date it sits at an even lesser 61 percent.

The pullback in domestic activity presented an opportunity for import manufacturers to assume a larger rental presence, and the rental companies themselves have found that greater segment, brand, optional equipment and color diversity lead to a better customer experience and increased profits. Today, renters can actually walk onto a rental lot and find a selection that is more representative of vehicles they would actually consider buying.

So what mix of makes and models can consumers expect to find on rental lots today? A review of IHS new vehicle registration data helps answer this question, and provides insight into overall rental fleet trends. Here are some highlights:

  • Through October 2014, the total number of vehicles registered with a rental designation reached 1.49 million units, up 4 percent from the 1.43 million registered over same period in 2013.
  • Ten brands have been responsible for 88 percent (1.3 million) of all rental registrations year-to-date.
  • Of the 10, domestic brands Chevrolet, Ford, Chrysler, Dodge, Jeep and GMC have accounted for 56 percent of rental business, while import brands Nissan, Toyota, Hyundai and Kia have been responsible for 32 percent.

The picture changes a bit when we look at rental penetration rates (“rental pen rates” for short), which is the number of rental registrations divided by total registrations. The rental penetration rate gives us a better idea of a brand or model’s dependency on rental business than simply straight volume. A high rate generally means there is less retail demand for a brand or model, while a lower rate reflects a more balanced relationship between rental fleet and consumer demand.

  • Chrysler’s rental pen rate of 41.8 percent is far and away the highest of all brands. Spun another way, more than 4 out of 10 new Chrysler sales were to rental fleets through October.
  • Things improve substantially from there, as Chevrolet’s second place rental pen rate of 20.1 percent is more than two times lower than Chrysler’s.
  • Pen rates for remaining brands sit below 20 percent, with Hyundai (19.3 percent), Dodge (18.2 percent) and Nissan (15.2 percent) rounding out the five brands with the highest rates.
  • Notably, Ford’s rate stood at 10.2 percent through October, while Toyota’s reached just 7.7 percent.

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Here’s a model-level breakdown of 2014 nameplates:

  • Totaling nearly 48,000 units, more Chrysler Town & Country mid-size vans were placed into rental fleets through the first 10 months of the year than any other 2014 model. It’s not surprising to see large numbers of mid-size vans in rental fleets given the needs of big vacationing families, but the fact that nearly half (46 percent) of all 2014 Town & Country sales have been to rental companies is a sign of limited retail demand.
  • In general, rental share for remaining models is more aligned with total new vehicle sales. Bigger selling models such as the Chevrolet Cruze, Toyota Camry and Corolla, Nissan Altima and Sentra, and Ford Focus and Fusion dominate fleet volume (and all do so with pen rates below 25 percent).
  • In penetration rate terms, the Chevrolet Captiva Sport’s 97.1 percent rental pen rate places it at the top of the leaderboard (which isn’t surprising since the model was only sold to commercial or rental fleets), followed by the GMC Savana (63.3 percent), Mazda Mazda2 (57.4 percent), Toyota Yaris (55.2 percent) and the aforementioned Chrysler Town & Country.
  • The Chevrolet Impala (both new and old designs), Mazda Mazda5 and Hyundai Accent all have rental pen rates north of 40 percent, while remaining models check in below this threshold.

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From a used price perspective, a retired rental vehicle can represent a strong value proposition for a consumer, in part because their extensive use and higher mileage tend to push prices lower than those of their non-rental counterparts. Prices will be even lower in cases where rental volume is high, and lower still when both volume and rental pen rates are elevated.   

No matter the case, timing is the key to maximizing an off-rental deal. The end of summer and incoming model year units prompt rental companies to begin decommissioning their outgoing model year inventory in large quantities in the fall. Not surprisingly, the concentrated supply hitting the market over a condensed period of time can quickly drag down prices for rental-heavy models by hundreds and even thousands of dollars.

For example, there were fewer than 600 auction sales on the 2014 Chrysler Town & Country back in August, but by November the number had ballooned to nearly 2,500 (an increase of 340 percent). Between the two periods, auction prices for the Touring model fell from an average of  $21,400 to $19,300 (down $2,100 or 10 percent); retail prices fell even more sharply, dropping from an average of $25,600 in August to $22,300 at the start of December (down $3,300 or 13 percent).

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                          image source:  Chrysler.com

Now, it’s highly likely that Town & Country prices (and mid-size van prices in general) will firm up as we move into the first quarter of 2015, but this simply reinforces the point that knowing when, and what, to buy can be the difference between an average deal and a great one. No longer just temporary transportation from points A to B, today’s rental experience can play an important role in determining what new or used vehicle a consumer buys in the future – and how much they pay for it.