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Comment by Exmoor | Hacker News Reader

I haven't rented for business in a few years, but every time I did the difference in cost between a "compact" and a few sizes up was trivial, perhaps two or three dollars a day. I generally jumped up to the largest sedan size because the cost was negligible and the cars were typically much nicer. Additionally, if they were out of that size, they'd bump you up to an SUV for free.

All this to say, at the pricing I've seen there is very little reason for someone renting a car to choose to rent a compact. The rental company can always upgrade people who booked a compact into a larger car, but if you have too many compacts you're screwed.

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It’s probably due to corporate travel policy on rental car. Most of the time it’s limited to certain class of vehicles, and it’s a hassle to upgrade depending on the company policy (screen capture price comparisons, director/VP approval, etc.)

As an individual I tend to get the smallest car I need. I don't want to pay the extra costs of gas for a larger car. Thankfully, smaller cars don't have the embarrassing acceleration they did 5-10 years ago. I'm probably one of the few who prefer smaller cars; they're more nimble and easier to park.

They often seem surprised when I turn them down when renting.

But in the very rare case I want an SUV or a Cadillac sedan or something, the rate is bloody insane -- something like 4-5x the cost for a vehicle that costs less than double to purchase than a smaller car.

I guess maybe a Navigator depreciates more quickly than a Camry, and that's what you're paying for, given the rapid turnover of their fleets?

Luxury-type cars are also inelastic in price. If you're the type that will rent a Cadillac, you'll often do so at any price.

I don't know. Maybe I'm not the target market, but I often think "hey, I wonder if i can get something a little nicer.." and then am blown away at the multiples of price.

For SUVs, usually it's been considering a ski trip or something, so, yeah, I can see where people are "stuck".

I use Sixt whenever I can because they actually have nice european cars. Hit or miss in the US (I once got a Camry when I was trying to get an Audi A3; the Camry's a bigger car of course but I don't need a big car).

Flew into Seattle once, got a massive brand-new Volvo S90 sedan with all the bells and whistles for like $60 a day, same price other places wanted to charge me for a Camry. I'm sure if I had asked for a Cadillac from Hertz it would have been $400+ a day, and less desirable to me. shrug

I agree with you, but the places don't hold a lot of the luxury cars in inventory for this reason too. As you noted the depreciation is too large to accomodate this kind of strategy. Once in awhile you do get a deal; I flew into San Diego on a friday evening and had a mid-sized car with Enterprise, and they went into the upgrade pitch. I was half-listening until I heard they'd get me in a 7-series BMW for $5/day. I asked them to repeat it and sure enough, that's what it was. It was a rare weekend where convertible BMW's didn't rent out, so they slashed prices for a 3 day weekend rental.

It's rare but it happens. It does show that they usually rent out of that stock though at the crazy prices you do see, otherwise you'd expect to see those cut-rate deals more.

> All this to say, at the pricing I've seen there is very little reason for someone renting a car to choose to rent a compact.

I can think of roughly 2 MM possible reasons[1] in conjunction with 1 regulatory constraint[2] that might suggest an investment in a fleet of compacts may not have been an entirely reckless business decision at the time...not that I would have swallowed that pill myself...just saying.

[1] https://en.wikipedia.org/wiki/United_States_Department_of_De...

[2] https://www.defensetravel.dod.mil/Docs/perdiem/JTR.pdf Ref. § 020209

Also, car manufacturers force large rental companies to buy certain mixes of cars. For example crew cab pickup trucks are a horrible category for rental companies but they still purchase them every year. To get the insanely low prices they get on their vehicles they have to play by the manufacturers rules.

It's B2B in a commodity market where competition abounds. Manufacturers like Mazda, Hyundai, etc. don't have crew cab trucks in their lineup, so is doesn't make sense that a corporation would choose to sign a contract in good faith with a manufacturer that "forces" unwanted liability on its books in exchange for volume if executives of the former didn't perceive overall net outcome as favorable.

I never said the net outcome wasn’t favorable. I said certain categories underperform other categories by a wide margin. You are assuming the goal is to maximize RPU when he actual goal is to maximize the delta between purchase price and resale price.

My whole point is that a lot of what goes on in rental doesn’t make sense unless you view it at as a business that generates used cars.

However, I doubt you really care and were more interested in making a pedantic point about how contracts are voluntary agreements between rational actors.

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