There are rental cars, and then there are kind of old rental cars—the ones where, during the initial walk-around with the agent, you carefully point out a scratch on the back door or a small dent in the hood, just to be clear that the blemish predated your term of use. But what happens to a rental car when it gets actually too old—when the days and miles and scratches accumulate past an acceptable point—and it can’t be rented out anymore?
The rental car retirement plan usually includes four possibilities: selling to consumers, repurchasing by the manufacturer, wholesale auctioning, or selling for parts.
First, if the rental car is in terrific shape—not too many miles, zero or little damage—then the rental car company might opt to put it up for sale directly to consumers. Enterprise sells the top 2 percent of its vehicles online, “haggle-free.” Hertz and Avis also offload some cars this way. You might call this pathway the ideal option for both old rental cars and prospective buyers. The car gets a permanent owner and, with any luck, a fresh life. The buyer benefits from purchasing a vehicle from a fleet that’s been held to strict maintenance standards. Ironically, rental car companies have nonetheless struggled to overcome a common consumer perception that their resale vehicles are less well-cared for than other used cars on the market.
The second option is for old rental cars to be rebought by their manufacturers. These are often called “program cars” because they’ve been obtained by the rental company with the understanding that they’ll eventually be repurchased by the manufacturer, provided the cars still meet certain limits on age and mileage. Avis, for example, tends to hold onto its program cars for the first 12 to 14 months of their lives. Once the manufacturers get them back, the vehicles will typically be sold to licensed dealers at auction and then make their way to consumers.
Third, the rental car company can essentially take the manufacturer out of the negotiations and sell old cars at wholesale auctions itself. This can be a good way for the companies to offload vehicles that aren’t in absolutely top-notch shape—ones that have borne a few more miles or suffered a bit more damage to their bodies. That’s because wholesale auctions don’t set strict parameters about the age of, damage to, or mileage on a vehicle (so long as it has a normal title, aka hasn’t been harmed to the point of becoming “rebuilt,” “salvage,” or “irreparable”).
Finally, the cars that are in truly poor shape are sold for parts or at salvage auctions. This last option generally accounts for a small percentage of rental cars—after all, these companies wouldn’t be doing so well if their cars were constantly too beaten up or damaged to get repurchased by other parties. But it happens.
Explainer thanks John Barrows, spokesman at Avis and several representatives of Enterprise.
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