In addition to buying a lot of cars, companies like Hertz also sell a lot. Typically, car rental companies buy most of their vehicles through buyback or depreciation programs from vehicle manufacturers. Under these programs, manufacturers agree to buy back vehicles at a specific time and/or price in the future, subject to certain conditions, or to guarantee the depreciation rate of the vehicles over the entire period of ownership.
In 2011, nearly half of the vehicles sold by Avis and a quarter of Hertz vehicles were so-called “software” vehicles subject to such agreements. Dollar Thrifty, the smallest of the three, almost never uses this option, choosing instead to rely primarily on the used car market to get rid of its used cars.
Car rental companies also have the ability to sell used cars to wholesalers who then sell them to used car retailers or directly to used car buyers. For example, last year Hertz sold approximately 65% of its non-software vehicles through auctions, 19% directly to dealers, 9% through its own Rent2Buy program or point of sale, and approximately 7% through other channels.