Exec: Enterprise holds steady on program cars

//Exec: Enterprise holds steady on program cars

Exec: Enterprise holds steady on program cars

DETROIT — Two of the three major rental-car companies are backing off from being responsible for selling their retired vehicles. Not Enterprise Holdings.

Unlike its two closest competitors, Hertz Corp. and Avis Budget Group Inc., Enterprise Holdings is not increasing the percentage of its 2015 fleet filled by program cars, vehicles for which the automaker takes responsibility for remarketing, said the executive in charge of the company’s vehicle acquisitions.

Susan Lombardo, an Enterprise vice president, said the company remains committed to using primarily risk vehicles — remarketed by the rental company, not the automaker — for two main reasons: It buys vehicles that it knows will be attractive to used-vehicle buyers, and it has built a remarketing network that can dispose of retired vehicles without dumping them onto auctions and depressing their prices.

“We do a handful” of program cars, “but where it makes sense,” Lombardo said on the sidelines of the Automotive News World Congress this month. “We work with manufacturers, and I think they really value our commitment to this space.”

Lombardo said Enterprise Holdings operates 130 Enterprise Car Sales locations that sell retired rental vehicles directly to consumers, but the majority of its vehicles are sold directly to dealers.

She said those firmly established sales channels give Enterprise the flexibility to help dealers find the vehicles they need and remarket vehicles in small numbers that do not disrupt the used-car market.

“We’ve really invested in an infrastructure,” Lombardo said. “We have literally hundreds of people dedicated to remarketing the vehicle in small numbers, not just moving them in chunks to the auction.”

In November, Avis Budget and the parent company of Hertz separately said they would increase the percentage of program cars in their fleets as a buffer against predicted declines in used-vehicle prices and for other business reasons.

Enterprise Holdings operates the Alamo, National and Enterprise rental-car brands. Hertz Corp. operates the Hertz, Dollar and Thrifty rental-car brands. Avis Budget Group operates the Avis and Budget rental-car brands.

The mix of cars in Enterprise Holdings’ rental fleet has decreased 7 percentage points over the past 5 years, with crossovers, SUVs and, to a lesser extent, pickups filling that void, Lombardo said. She said the company’s variety of vehicles satisfies consumer demand and assists manufacturers by serving as extended test drives. It also makes it easier for Enterprise Holdings to sell those vehicles once they are retired from use.

Lombardo said Enterprise Holdings has almost 800 vehicle makes, models, and model year combinations in its fleet. She said manufacturers are more “strategic” about the vehicles they sell to rental fleets, and her company works with them to expose their vehicles to rental-car customers.

“We work closely with them and their marketing teams to understand what they are trying to achieve,” she said. “We’re buying a greater variety of vehicles than we ever have before.”

Many of the vehicles are crossovers and SUVs. Lombardo adds that the mix appeals to the rental company’s customers. “What’s great about the small crossover is that even someone who is driving a sedan is very comfortable in a small crossover, a small SUV.”

You can reach Arlena Sawyers at asawyers@crain.com.