Sell rental vehicles in July, during the peak summer season? The unthinkable happened in 2020, as rental operators faced the anomaly of a depressed travel market and a used car market desperate for supply. Some operators say the unprecedented wholesale pricing they enjoyed saved their companies.
The enclosed chart tells the story from an auction volume perspective. The x-axis, which represents weeks starting with Jan. 1 and running through the week of Nov 23-29, shows that in week 23-26 — the month of June — car rental sales into the wholesale market peaked.
“Unlike the typical seasonal pattern of off-rental returns, 2020 showed a delay in spring de-fleeting as lockdowns and uncertainty curtailed the remarketing of idled Spring Break units,” said Tom Kontos, chief economist from KAR Global, owners of Adesa Auto Auctions.
“Nevertheless, rental companies and manufacturers were able to capitalize on high wholesale prices to maximize values for off-rental units during late spring and throughout the summer.”
Kontos said that off-rental volumes have waned in recent weeks as most rightsizing and liquidation has already taken place, thus bucking the normal fall de-fleeting pattern.
Wholesale pricing is likely to hold firm in the first quarter of 2021, however, on strong demand and lingering supply issues.