Used car prices are already soaring, with supply limited and the number of shoppers increasing by the day. Now, if you’re in the market for a used car, you’re bidding against some deep-pocketed competition: rental car companies. They’re facing a shortage of their own and are shopping for used cars at auction.
Hertz spokeswoman Lauren Luster told reporters, “The global microchip shortage has impacted the entire car-rental industry’s ability to receive new vehicle orders as quickly as we would like.”
She adds that “Hertz is supplementing our fleet by purchasing low-mileage, preowned vehicles from a variety of channels including auctions, online auctions, dealerships, and cars coming off lease programs.”
Enterprise is doing the same. “Our fleet acquisition team is working hard to secure additional vehicles — both new and low-mileage used vehicles — through all channels to meet the ongoing increase in demand,” said spokeswoman Lisa Martini.
Rental car companies traditionally buy lower-trim cars in large fleet orders. They rent them out for a year at most, then auction them off. But they sold off much of their fleets last year to stay afloat as the COVID-19 pandemic restricted travel. Now that restrictions are easing and Americans travel again, they can’t find enough cars to meet demand.
That’s sending them back to those auctions, this time as buyers.
The competition will further inflate already-high used car prices. Jonathan Smoke, Cox Automotive Chief Economist, explains, “We expect to see records in the Manheim Index (a measure of used vehicle prices) through June before demand softens enough to align with supply trends. We expect retail prices to continue to rise into the summer, as retail trends tend to follow wholesale trends with a six-week lag.”
