If you’re a car rental company of any size, you source the majority of your rental fleet through your factory sales rep and a grounding dealer of that franchise. If you’re small, you scramble to buy from many sources. Whatever the case, your local car dealer could be a good source of rental inventory, especially for spot or “opportunity” buys.
How do you start a relationship with a new dealer? Pick up the phone! Ask for the fleet sales department. If that doesn’t work, ask for the sales manager or general manager.
Your first goal is to find out if the dealership has any desire to sell to a car rental company. Some franchised dealers, especially the luxury marques, have no interest in rental sales — especially at a discount.
Yet many do, and they may look to move as many as 20 cars at a time.
Foster the Relationship
Foster your relationship with the dealers before you need cars. For better price leverage, ask them to call you when they need to move product.
Many dealers, especially the import sellers, like to move volume around month’s end to maximize manufacturers’ stair-step incentives, which the dealers receive for achieving a sales threshold. You’re also in a good position at certain times of the year when retail sales are slow, such as December, January or mid-summer.
The units they’re looking to move will be sold with retail rebates and often of a specific model. Therefore, you’ll be able to shop a better deal if you’re flexible on model types.
Contact dealers in the middle of the month, when they’ll know if they need to supplement their retail sales to hit their targets. They may say that they need more time to see what price they can offer you, but then still come back with a very good deal. They might even sell at a loss — no dealer wants to miss a stair-step incentive by just a few cars.
Negotiating the Deal
In terms of price, fleet dealers will usually work from factory invoice minus rebates. Depending on how many units need to be sold, the dealer may discount you some or all of the holdback, which is a percentage (usually 2%-3%) of the invoice amount. Some import manufacturers don’t offer their dealers holdback, but they still offer them other incentives such as stair steps.
Talk to the dealer about opportunities after the sale. An impetus for them to work with you may be to get a piece of your parts and warranty business. They may also be interested in buying your retired rental units. Agreeing to work with the dealer on either could help solidify a sale.
Additionally, ask if the dealers might need your car rental services for clients. They may have a provider, but you can be their “back-pocket” rental company if the need arises.
Know the Process
To keep the relationship pain free, it’s important to understand the buying process.
For rental companies that have a fleet account number with a manufacturer, buying from retail stock could trigger extra paperwork in which the retail unit has to be re-invoiced as fleet — an extra hassle for the dealer that could affect your buy price.
Provide the required documentation to the dealer before the actual sale or no later than at the time of sale. This includes DMV paperwork, a copy of your business license or dealer’s license and other credentials such as a sales tax exemption certification. As a service, many dealers can complete your tag and title work.
And remember, dealers will expect their money when they sell you the car — in fact, most won’t release the car until it’s paid for.
At the opposite end of the spectrum, there are national fleet dealers and brokers that sell vehicles to rental companies anywhere in the country. For a list, check the directory in the Auto Rental News Fact Book.
A national dealer can usually arrange for cars to be shipped directly to your local dealer with no additional transport cost, except for a $100 to $200 courtesy delivery fee. However, spot buys from a national broker could incur a transport cost.
About the Author
Joe Lyons is remarketing and fleet sales manager for Marple Fleet Leasing, a supplier of Ford vehicles to car rental companies and other fleets. Lyons will lead a roundtable on fleet remarketing during the “Fleet Jam Session” as part of the 2014 Auto Rental Summit