Dollar Thrifty losing with Chrysler cars

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Car Rental News - 07/07/2008


Dollar Thrifty is losing more than competitors when it resells cars from its all-Chrysler fleet.

Most car rental companies are reeling from the high cost of fuel, with decreases in demand leaving their fleet sitting in the lot rather than heading out on the road. Dollar Thrifty is suffering even more than its competitors as the company, a former Chrysler subsidiary, is realizing less revenue when it sells used vehicles from its fleet.

When Chrysler divested itself of the car rental company, formerly named Thrifty Automotive Group, it forced Thrifty Automotive – now Dollar Thrifty – to purchase cars for its fleet from Chrysler.

Vehicle re-sales have more impact now on a rental car company’s bottom line than vehicle purchases. Many firms are down-sizing their fleets to raise cash and also reduce daily operating costs as business declines and fewer vehicles are required to operate.

Dollar Thrifty issued a profit warning last week, saying that vehicle depreciation costs will lower its 2008 earnings. Later in the week the firm told that by "depreciation" it means the difference between the cost of buying vehicles from Chrysler and revenue when the vehicles are re-sold.

Most vehicles in the Dollar Thrifty fleet are Chrysler-made and bring lower re-sale prices than vehicles of other car makers, said credit analyst for Standard and Poor’s, Betsy R. Snyder. Other car rental companies have more diversified fleets and are not similarly affected.

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