The car market these days is in a moment of demand outpacing supply, and rental car companies are not helping. All that and more in The Morning Shift for May 17, 2021.
I’ve always been generally aware that rental car companies and fleets in general have an outsized influence on the American car market. Hell, I remember the Chevy Malibu Classic existing. You have to explain that somehow.
In any case, a new article from Automotive News lays out how rental car companies fit in with today’s car market struggling amidst a global semiconductor chip shortage. From Automotive News:
Major rental-car companies with their large fleets are known to buy when prices fall and sell when they rise. But instead of unloading their fleets to make a decent profit, with prices currently soaring, rental-car companies have been scouring the country for additional vehicles while holding on longer to the ones they have.
According to Cox Automotive, the average mileage for rental risk units in April was 82,800 miles, a 62 percent increase from the same time last year. That figure was up 23 percent from March to April of this year. Rental risk units are vehicles that rental-car companies own outright, and they represent the vast majority of rental cars in operation, said Zo Rahim, manager of economics and industry insight at Cox Automotive.
The average price for rental risk units sold at auction was up 32 percent in April compared with the same time a year earlier, and it was up 7 percent from the previous month.
These figures are exaggerated because a year ago we were in the depths of pandemic quarantines, but they’re still pronounced.
If you’re hunting for a reasonably-priced car and having a hard time, you’re feeling the effects of rental car companies tweaking the market.
Speaking of year-over-year changes, car companies are in a rebound, surging on newfound demand even amidst shortages. Just not, well, take a guess.
From Automotive News:
Nissan stood out as the only Japanese automaker still struggling to right itself as the pandemic lifts and consumers clamor for new vehicles. The company booked its largest-ever operating loss in the fiscal year ended March 31 and said last week it expects another net loss in the current fiscal year, making a third-straight year of red ink.
In terms of operating profit, Nissan hopes to simply break even this fiscal year, even as its competitors forecast big gains ahead.
Nissan was already on shaky ground when Covid started turning the world upside down. None of this is shocking.
I’m sure the 400Z will turn it all around, though.
Foxconn has been partnering with ambitious carmakers but not overly prideful ones, such as the eternal startup Fisker. Fitting into that mold nicely is Stellantis, which is a pile of mashed potatoes and also Jeep. From Reuters:
Stellantis and iPhone assembler Foxconn will announce a strategic partnership on Tuesday.
Fiat Chrysler Automobiles, now part of Stellantis, said in January it planned to set up a joint venture with Hon Hai Precision Industry, Foxconn’s parent company, to build electric cars and develop Internet-connected vehicles, initially focused on the Chinese market.
Efforts to finalize the partnership were put off by FCA’s merger with PSA Group to form Stellantis, which was completed in January.
A relaunch in China is one of the main goals of Stellantis.
Tesla is still number four in the American luxury car market, but it’s closing the gap to the lamestream manufacturers, as Automotive News reports:
The California EV specialist registered 71,345 vehicles, an increase of 52 percent compared with the same period a year earlier. BMW was first at 84,397 (up 29 percent), Lexus second at 80,166 (up 32 percent) and Mercedes-Benz third at 77,826 (up 24 percent). Tesla remained ahead of Audi, which it leapfrogged in 2020.
While Infiniti and Jaguar were the only luxury brands whose registrations declined in the first quarter, Tesla’s gain outpaced all but Genesis, whose much smaller registrations more than doubled.
While all of that is happening, Tesla’s boss is still heavily involved in the world of crypto. Musk has been in the news lately for announcing that Tesla would accept Bitcoin then suddenly announcing it would not, a move which is definitely not a pump and dump scheme, for reasons I do not understand. From Reuters:
Bitcoin rallied from a three-month low on Monday in a volatile session that saw investors initially selling and then buying cryptocurrencies in the wake of Tesla boss Elon Musk’s tweets about the carmaker’s bitcoin holdings.
In his latest tweet, Musk said “Tesla has not sold any bitcoin”. That seeming clarification came after weekend tweets hinted that Tesla (TSLA.O) was considering or may have already sold some of its massive holdings.
Musk has boosted crypto markets with his enthusiasm for the asset class, but has lately roiled trade by appearing to cool on bitcoin in favour of its one-time parody, dogecoin. The gyrations are beginning to spook even steeled traders.
It’s just generally fun to see Reuters reporting about anything with “doge” in it. You have to respect Musk for taking the dumbest possible route at every opportunity.
I have always sort of figured that car sharing, ride sharing, and the general pivot to apps would conspire to put rental car companies out to pasture by now. We’d all be on Turo not still booking on Hertz. Maybe my whole premise is off! Maybe rental car companies will stick around as long as cars do.