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Old 01-04-2008, 07:20 PM   #1
XDCX
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Default Impact of Declining Sales to Rental Car Companies

Chrysler's Jim Press recently indicated that the company would further reduce its sales to Rental Car Companies in 2008 as it attempts to reduce its dependance on fleet sales.

He noted that although the company had made similar efforts in 2007, the effort in 2008 "will be more significant."

Given that 100% of the off-rental vehicles are ultimately sold by the Dealer Body before they reach the end-consumer, what's the impact going to be to the Dealers as a result of these declining rental car sales?

In a perfect world, one could argue that the reduction in sales to rental car companies will increase residuals and lower leasing costs to retail customers - ultimately increasing total vehicle sales. But in the real world, will the residuals on a Sebring or Avenger increase enough to make them attractive vehicles?

Further, what happens to the customer that historically couldn't afford a new car and purchased a "program car" instead? Do they pay more for the "program car" or do they just buy something else.

As always, time will tell but I'm not 100% sold that a reduction in sales to rental car companies is necessarily a good thing for Chrysler LLC or its dealers.
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Old 02-08-2008, 12:17 PM   #2
okcarl
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On the models that are currently out there the damage has allready been done. Reducing future sales of those models to rental fleets probably will not help resale or residual values. But by not putting the new models as they are released into the fleets will improve those models.
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