In yet another round of bad news for U.S. carmakers, rental car companies in the United States have started to purchase more foreign vehicles than domestic brands for their fleets.  During the first six months of this year, rental companies only purchased 48.8 percent of vehicles from American suppliers.

The news, published by the trade publication Automotive Fleet, shows a stark contrast between the two-thirds market foothold that U.S. manufactures had only a year earlier.  The news is even worse if compared with statistics from three years ago, when almost 8 out of 10 vehicles bought by rental companies were American made.

As American producers play a smaller role, foreign care makers have filled the gap. Agencies such as Hertz now carry as many Toyotas as Fords, and the Chevrolet Impala has been replaced by the Nissan Altima as the top selling car in the rental market.

For years U.S. automakers used rental fleets to rid itself of overstock, unloading the vehicles at a deep discount to agencies.  Until recently many of the agencies such as Avis, Hertz, and Dollar Thrifty were owned by the U.S. carmakers.  But in a recent push to retool, the carmakers have spun off their rental firms to independent agents.  Carmakers have also reassessed the practice of giving deep discounts as to car firms. According to Chris Brown, editor of Auto Rental News  “automakers are now trying to sell to rental fleets like they do to the overall market.”  This has led domestic automakers to slash the discounts, raising the price rental agencies pay for  domestic cars.

Consumer demand also plays a large role in the car rental market.  As American consumers tastes change, they seek to see this change reflected in the rental market.  While foreign competitors may jump at the chance to gain a larger share of the rental market, they could be repeating the mistakes made by domestic producers.  Recently Hyundai announced that more than 30 percent of its sales in the U.S. have gone to rental fleets.  Some in the auto industry believe this move might be an overreaction by some producers.

Thanks to www.tribune.com for the quotes in this article.