When is a rental also a test drive?

Jennifer Collins Feb 16, 2012

Jeremy Hobson: General Motors reports quarterly earnings today. And one of the things analysts will be looking at is how many cars are being sold to rental car companies. American automakers have traditionally dominated the rental car market here in the U.S. But now, those rental car fleets are getting a foreign invasion.

Marketplace’s Jennifer Collins reports.

Jennifer Collins: In the past, only about 7 percent of Toyotas became rental cars. Last month, that jumped to almost 20 percent. Toyota’s trying to overcome years of problems that kept people out of its cars. First, there was this:

Harry Smith on CBS “Early Show”: The carmaker is voluntarily recalling more than two million vehicles because the accelerator can get stuck.

Then there were supply shortages after the Japanese tsunami. John Healy of Northcoast Research says the company is trying to get people back in its cars.

John Healy: And I think a good way to illustrate your cars are safe, reliable and meet the needs of Americans today is to get your cars into a rental fleet.

There are drawbacks. Former auto industry exec Peter De Lorenzo says deals with rental companies are less profitable than traditional sales.

Peter De Lorenzo: And you run the risk of having people equate your brand with “just a rental car” — something they would rent but never buy.

He expects Toyota to downshift on the rentals when sales kick into gear.

I’m Jennifer Collins for Marketplace.

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