How do rental car companies make any money?
July 27th, 2010 | by carrental |
Gossimer asked:
The rental car company by my bodyshop has about 10 people working in there office and rents cars from $20-$40 a day. How do they make any money?
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The rental car company by my bodyshop has about 10 people working in there office and rents cars from $20-$40 a day. How do they make any money?
dfw car rental
2 Responses to “How do rental car companies make any money?”
By WebMan on Jul 28, 2010 | Reply
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I was told by a friend that works for a popular rental company they make money when they sell the vehicle at the end.
By San Diego Guy on Jul 31, 2010 | Reply
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My profession is accounting, and trust me, car rental places make money. Sure, they will advertise $20 - $40 per day, but look at some of the upgrade rentals. 2 years ago, I rented a Hertz Shelby Mustang for 6 days and paid over $1,200. It was totally worth it. I had a blast with the car. If you figure that the car costs Hertz about $600 - $700 per month, the car starts to contribute to the margin after the 4th rental day per month. If they rent it for 20 days in a month, they take in $4,000 in revenue.
Most rentals are for mid-size cars to business travelers who charge the expense with a company credit card. Often, it will cost $70 - $90 per day just for the car without add-ons.
There are also other charges that are tacked on when you rent, such as supplemental collision and personal property insurance that many renters select, but often never use.