Slightly Used Bargains

For economy-minded shoppers in search of a used car of recent vintage, the best deal in town may be at their friendly neighborhood car-rental agency. Because the big-buying rental companies pay even less for a car than a franchised dealer does, they can sell their used cars at prices that the dealer cannot match. A rental agent, for example, pays $152 less for a new Buick than a dealer does, and the difference can range up to $200 on other makes. To hold maintenance costs down, most agencies sell off their fleets at auction or elsewhere every four or six months and replace them with new ones. Result: the renters flood the market with almost-new cars, which provide tough competition for both the dealers' new cars and much older used cars.

Dealers complain that this practice is becoming a major threat to them, especially in a year when their sales become more sluggish each week. At the National Automobile Dealers Association convention in Miami two weeks ago, more than 3,000 irate dealers put on buttons proclaiming "Stamp Out Subsidies"--and threatened legal action against the industry practice of making deep discounts for the rental companies. Last week in Automotive News, an advertisement sponsored by the Ford Dealer Alliance asserted in effect that ordinary car buyers were being overcharged so that automakers could sell to "privileged customers" at reduced prices. There is a sense of urgency in the dealers' charges because the rental firms will begin dumping their first 1970 models next week.

Continue Discounts. Executives of the major rental firms vigorously deny that their stations sell directly to the public, and they are probably right so far as company-owned stations are concerned. Dealers contend, however, that the firms' largely autonomous independent agents, many of whom operate in suburbs and small towns, will sell their used cars to anyone making an offer.

That is only part of the problem. The big rental companies sell their barely used autos at bargain prices in auctions regularly held in cities and towns all over the U.S. The auctions are closed to the public but open to all kinds of dealers, including gas-station operators who sell autos. An individual can choose a car before the auction, pay a willing used-car dealer to bid for him, and still save up to $500.

The manufacturers are likely to continue their discounts because they are competing so hotly to sell to the fast-growing rental-car companies. An estimated 12% of the 1970 models are now on lease or rental, and the annual figure is expected to rise to 18% within five years. The manufacturers also get a free ride in the advertising of the rental firms, and each car renter becomes a prospective buyer--at no undue expense to the manufacturer.

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