All Cars, All the Time

GM to Raise Rental Car Fleet Prices

GM has signaled to rental car companies that it intends to boost its fleet prices for 2007 models. Specific numbers have not been discussed, but Hertz is expecting the industry to see double digit increases this year.

Now that GM is shutting down manufacturing plants, there will be less over capacity that it needs to dump on rental fleets. Rental cars hitting the sales lots would command higher prices and thereby raise residuals. This would increase the transaction prices for new cars and improve brand image. Also, currently rental companies keep their cars around six months (buying in January and February, and a second batch in July and August) but they might be tempted to hold onto their cars for nine to twelve months. These higher mileage cars would present less of a temptation for new car buyers.

Possible "flies in the ointment" include concerns over market share loss and a bid by competitors to steal business away with lower pricing. Your impact? Potentially higher rental and retail prices.

Original story here (WSJ last free day is 5/10, so this link won't work after that)