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Comment by supernova87a | Hacker News Reader

Maybe someone can explain in kindergarten terms for me --

A root cause of this problem is that the rental car companies sold off a lot of their fleets thinking that the pandemic would absolutely crater demand for >1 year.

Am I misunderstanding? Those cars went somewhere -- they didn't go into the dump. Wherever those cars went, why are they not causing some cushion / surplus in a different place that relieves some shortage? They got locked up in a warehouse and are inaccessible? Sold off and can't be bought back?

Reporters in their simplistic descriptions make it sound like those cars just evaporated.

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I mean, in the steady-state, the United States consumes 16 million automobiles a year: https://www.goodcarbadcar.net/usa-auto-industry-total-sales-... The population only grows ~2 million a year.

Cars hit end of life, get wrecked, are destroyed by floods, etc.

Also, car rental companies sold their fleets into the market after new car manufacturers slashed production, so fewer new cars were going out the door.

From my understanding, a used rental is just a couple of notches above the bottom of the market so people who bought those replaced their beaters and sent those to the junk yard. So they are not stored anywhere but are being used in place of the cars that went out of the market.

Most of the rental cars come in as brand new; & usually gets sold between 3 years or 36000 miles. Any car at that stage is certainly not a beater. A beater (with regular usage) will be something like 10+ years old and or 200,000 miles or over.

See the cars at enterprisecarsales.com , where most of the cars are Enterprise Rentals.

Some people may not consider it a beater, but rental cars get treated like absolute crap (regular gas even if they should get premium, traditional oil vs synthetic, renters beat them up because they don't care). If I were choosing between a rental car at 36,000 miles or a non-rental at 46,000 miles, I'd assume the non-rental would give me fewer problems in the short term and probably make it to a higher mileage in the end.

Still better than the proverbial $500 Civic with 250,000 miles, 7 owners, and 3 accidents, but not great vehicles to own by any stretch of the imagination.

This, rental car is a car driven roughly, in mud, in rocks, with rash driving, rarely serviced or poorly serviced, poorly driven, in potholes, or quick acceleration or quick braking can not be further than truth

How many times one rents a car for personal use v/s on official use or business use? Business use is way higher than personal use. Most of the people who rent it for business use, are reporting to their boss or some kind of supervisor; & if they thrash car, car company reports/charges damages, it will come back to the person who drove it. So, no, a majority of renters don't beat cars because they still will be on hook for damages.

How many regular rentals need premium? None. Only exotic rentals might. Most of the rentals are run of the mill Toyota,Hyundai, Mitsubishi, mid size or mid range; the cars which are most of the time good for everyone. None of them needs premium. Although, this fuel thing exists. When I used to rent, I used to buy the cheapest fuel at any cheapest station. Now in own car,I go by only Shell Regular.

Rental are new, & new cars are covered bumper to bumper for about 36000, transmission till 60,000.

Yes, rental gets different drivers, but so do to some degree of non rental (family, friends, not common but still not zero).

So, as stated above,a 36,000 miles in a rental is not much different than same in a non rental.

In my opinion; there is a similar set of drivers who dont care for their own car, & almost most of them will not care for rental or friendly loaned too. People race their own cars, people floor their own cars.

My personal experience; my used car came with all shop visit records; verifiable, from Ford's system. Yes, it had about 4000 miles more than projected 7 years 150,000 miles on projected line, but that gap is getting less everyday with my moderate use (1000miles a month).

Rentals are beaten is a personal opinion. Any car can come out beaten. People who beat cars don't care if they rent it or own it. But beating a rental car might bite back quickly instead of beating one's own car.

I think you read "beaten" literally. Nobody is saying people bounce off other cars and grind railings in the rentals. It's just rentals get more abuse: no break-in, often loaded with multiple people and luggage, door slammed, left under sun, small issues are not taken care off and develop etc. Not to mention they are already the special trims with all kinds of price cutting done from the factory.

Other than the "no break-in" all of that is perfectly normal car usage.

Exactly, you won't be changed for any damage doing this to a rental (nor you will be changed for not following the break in procedure).

Respectfully, this was in original comment:

> renters beat them up because they don't care

> beaters and sent those to the junk yard.

Still, all of the above also gets applied to owned cars too. People use cars for multiple people; people slam doors, majority of personal cars have no garage, small issues and negligence.

Newer cars (rentals or not) have factory warranty, where service center takes care of minor issues without even asking.

I respect your opinion that rentals are bad than owned cars, other things like mileage same; but my opinion & experience is, people will be bad drivers, be it their own car or rental; & even bad drivers will be a bit more careful with a rental because chances of them paying for it immediately financially is more than paying for damages to their own car.

You quoted my comment that people replaced beaters they had with the rentals they bought, I figure you read it as the rentals are also beaters? That was not my meaning, if I thought it's an ambiguous statement I'd try to phrase it differently.

:-) oh ok. In the I would add my personal experience (might not be the majority of people who buy rental), I bought a rental from Enterprise because of no haggle price, factory warranty, low age, highest possible trim & about 10% cheaper than used car dealerships where I had to play & dance the negotiation dance; all this just pre covid.

I was an Enterprise rental customer for about 7 years before that, renting a car about 2-3 times, not preplanned; & decision based on rental cost & availability, flexible dates.

What do you mean by "highest possible trim"? You know that rentals are special low cost trim and it's possible to get a much better trim when buying a car made for retail sales, right?

I mean my personal purchase is everything a retail highest trim offered, same trim name, mechanical, electronics, accessories, brochure, warranty. Not all rentals fit into same mould, rental companies do have basic trim, mid trim & high trim of same models based on their negotiation with manufacturer/dealer, prices & many other things.

Other trims were also available.

I see, you mean trim literally, like "Camry XSE"? Usually people say "highest trim" to mean "loaded", "with all the options" etc.

I think you are right regards trim. I am new to English, so most of my vocabulary is from Google searching the meaning. :)

My car is Ford EcoSport, Titanium 4WD. Highest. The 2nd trim was Titanium FWD. Then SE. Then the lowest basic trim, S.

All trim options were available, obviously as used cars with all having different color, prices.

rental cars get treated like absolute crap

This is the conventional wisdom, but is it actually true? Anytime I've rented a car, I've handled it like a virgin princess because I know any scuff is coming out of my hide. My own car, hell, rub it up against the concrete barrier for all I care. That is a vehicle I would not want to buy on the used market.

Purely anecdotal, but I notice my family members drive the cars a lot “harder” in terms of top speed, “jack rabbit starts” and braking more intensely than usual. I suppose it’s a combination of not being used to driving a car with such different weight and power, coupled with a more carefree attitude that being on vacation gives. We joking call it “vacation driving”.

Why would the renter be changing the oil?

I don't get it. If the article is true, then we shouldn't see any cars for sale by enterprise or hertz. What am I missing?

I have not read the article, but enterprisecarsales.com has about 7000 cars for sale; no filter, nationwide. Doesn't look like a big number; but car rental companies sold a ton of their fleet on the onset of covid too.

The cars with extensive damage or accidents, any bad mark on carfax goes to wholesale auctions. These are just the ones near end of mileage or age warranty.

The news, the hype, & the reality too contributed to the car sales. I am not in market, but still I see now the 2/3 year used car prices almost very near to their new counterpart, even on enterprise, compared to dealer websites for new cars.

Hardly "just a couple of notches above the bottom of the market". They tend to be rather new, high mileage for their age but not high mileage in the grand scheme of things, and maintained by professionals. They're just a couple of notches below brand new.

Might be my luck then as all rentals I have rented did not look like they had been maintained at all, least by professionals (in car maintenance).

For desirability they are definitely near the bottom of the market. Even if they have a meticulous maintenance schedule, it was almost certainly driven harder.

And a in 1:1 private to rental car sale, the rental would be cheaper almost always.

>A former rental may cost less money up front, but it will also return less money down the road. Getting maximum resale value for a used rental car is difficult, because many shoppers are wary of buying former rental vehicles, so much so that some states have passed laws allowing car dealerships to call rental cars "program cars" in hopes of avoiding the stigma. https://www.cargurus.com/Cars/articles/the_pros_and_cons_of_...

I can see there being one or two downsides to buying a rental car, but "driven harder" is a weird one to me.

First, almost all renters avoid abusing a rental car because they don't want to get charged for any damage. (Maybe the exception would be a sports car.)

Second, I mean, unless they took it out to the track and spent a day going laps with it, cars these days are basically built to easily handle any kind of driving behavior you can get away with on public roads.

What really kills cars are accidents and lack of maintenance. Neither are hard for a trained mechanic to detect.

> First, almost all renters avoid abusing a rental car because they don't want to get charged for any damage.

What about constantly redlining the engine? That will put a disproportionate amount of wear on the engine for the miles driven, but won't cause any immediately-visible damage.

I've never known a single person to do this. I hear it mentioned a lot, but no one ever knows anyone directly who's done it. Always "my cousin's ex's brother in law did it once."

Guys in our area of London every summer would routinely rent reasonably upmarket cars, new BMWs, Mercs, etc. for a few weeks and not just use them to accelerate hard around the roads (though they did) but sit there, out of gear and just floor it for dozens of seconds at a time.

I personally do drive rentals to the max safe performance they will give me, which is more like what the description was about, in any case.

> but sit there, out of gear and just floor it for dozens of seconds at a time.

Revving in neutral is not particularly horrible for a car. Perhaps worse if done cold. The no load situation makes timing on the car easier.

Likely one tank of regular gasoline in a performance engine, and a stop and go to the neighborhood grocery will do more damage.

Redlining while in Drive in automatic transmission means driver is driving over the speed limit or doing rash driving; which millions of car owners too do that. Although in both cases it never near red line in automatic transmission cars.

Redlining while parked or neutral is absurd. Who will rent car just to rev it up. & For how much time? Few minutes? Hours? People will be looking at this person who is redlining a car since last few hours.

>What about constantly redlining the engine?

Not even close to a consideration as long as the engine is getting scheduled fluid changes.

Source: used to be privy to some OEM testing info.

Also, a Dodge Neon can go 50 in 1st gear, or maybe it was 2nd, I forget.

From the article, rental companies would not keep cars beyond 40-50k miles, hardly a couple of notches above bottom.

They sold them at a steep discount on the open market and presumably consumers desperate for a car at a good deal scooped them up.

https://www.usatoday.com/story/money/cars/2020/06/19/hertz-e...

> Those cars went somewhere

The driveways of people who couldn't buy new cars because #ChipShortage.

> Am I misunderstanding?

Cars disappear over time (they age, get in accidents, etc.) Due to production issues, the replacement construction of cars has dropped dramatically. The rental companies decided to get rid of their buffer with the expectation they would not be used during the pandemic. (Plus, rental companies age out cars naturally)

However, given the limited new cars, they have not rebuilt their fleet as fast as possible.

The car companies did the same, but what they did was cancel their slots for chip production while having little chip inventory.

So yeah, the root is back to the car companies. The rental car companies probably would have been dealing with a much smaller problem from the overall car demand increase from their sell-off if the car companies had maintained their production capacities of their supply chains.

Demand drivers: Regular fleet replacement of crashed/old cars + cars for people who used to take public transport + cars for people moving from city to suburbs/ country + strong economy/household wealth increasing demand

Supply: - production curtailments (early COVID) - limited production (supply chain issues / chip shortage)

= demand exceeding supply

Supply of cars, both new and used, is severely constrained, and the sell off from rental companies didn't make a dent in that.

Right now, I know of dealerships that are selling new cars for ABOVE MSRP. I have gotten a half dozen offers from my local dealership to buy back the used truck they sold me for more than they had sold it to me for.

I made money on my model 3 from just a year ownership. It’s wild.

Wild indeed, and unsustainable. There's going to be a correction.

What will the correction look like? It almost has to look like the price of cars crashing, doesn't it? It will start with new cars being overproduced, dropping in price, then used cars dropping.

2023 might be a good time to buy a car, if you can hold on until then...

Same with the housing market. I cashed in this last month on my house and just going to wait out a correction. Totally not sustainable.

sounds like shorting the market, which is tough because the market usually goes up. Even if you're right in assessing it's overvalued, if it doesn't crash in a reasonable amount of time, the bottom might still be higher than what you sold at.

>What will the correction look like? It almost has to look like the price of cars crashing

I really hope this happens harder/faster than inflation just so we get a couple years free of morons on the internet screeching about how their 4Runner holds value.

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