car rentals at john wayne airport

DETROIT - as the nation's Big Three carmakers remake itself into smaller, leaner companies, the car is suffering collateral damage.

All three have the production this year to the supply in line with lower demand for their products, and further cuts are inevitable in the coming year. They are also to wean itself from rebates and other incentives to the sales price to the sticker price.

That means fewer cars for low-profit bulk sales to rental companies, analysts and some officials and landlords say that already has led to price increases on the airport service counter.

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"" I think it goes to higher costs they have to try to, "said Michael Millman, an analyst who follows the car rental worked Soleil Securities in S-New York City.

General Motors Corp., the nation's largest automaker, said last week its sales to rental car companies and other fleet buyers in October were 10,000 vehicles compared to the same month last year. Company officials have predicted a reduction from 80,000 to 90,000 for the entire calendar year, with the continued decline in the coming year.

Ford Motor Co. is no specific fleet sales numbers until later in the year, but that they are up 9 percent in 2006 mainly due to the phase-out of the Taurus model, which is in its final year of production was sold primarily to rental companies. Ford expects fleet sales next year be dropped, without 175,000 Taurus models on the market.

DaimlerChrysler AG Chrysler Group is also non-fleet numbers, but said that she had it in October in line with a strategy to focus more on retail.

At Dollar Thrifty Automotive Group Inc., President and Chief Executive Gary Paxton said the company has completed negotiations of 2007 on purchases and probably need a day rental price increases of 7 percent next year to cover higher costs.

The Big Three production cuts likely will force all landlords to raise prices, he said.

"" It depends a bit from company to company, but it is very close to the same number. We see all three of the major U.S. producers, the domestic staff, limiting the number of vehicles to rental fleets and increasing the depreciation on us "," Paxton said.

To the higher prices, most landlords will be on its fleet a little longer, which means that you are likely to see slightly older rental cars in the coming year, said Michael Gallo, an analyst who tracks Landlord for CL King & Associates in New York.

At Enterprise Rent-A-Car, Chairman and CEO Andy Taylor said the company increased prices this year by 0.1 percent, and he does not see a sharp rise in 2007 because of cost reductions and the way the company buys cars.

Company buys from manufacturers win bet resale of the cars themselves. Many landlords do, but also a higher proportion of their fleet with the automobile manufacturers guarantee to buy them back after a certain time.

Taylor said Enterprise, the nation's largest car rental company may have to pay more for the cars at the beginning, but also to benefit from higher resale values.

"" We pay slightly more for cars, "said Taylor. "" We will see how it shakes with the used car market "."

Millman, some owners spend more to Asian manufacturers, such as the Big Three cut, but the car manufacturers have a much tighter supply and less flexibility. He said that the big three of the flood of big sport utility vehicles may be some opportunity for rental car companies.

"The rental companies probably would be limited, as many of those they wish to accept," he said.

Paxton said there is no evidence that the Big Three will be removed from their production and fleet sales cuts, but he does not see increased rental car prices beyond 2007.

For companies, Taylor said this is just another of many cycles he has in the automotive industry, although the car manufacturers' problems have deeper roots than in the past. But he says more stable prices for car rental companies in the years before.

"" There is still an overcapacity of production in the world, "he said. "If all the deals that the production, then I think you might return to the trend a few years ago. "

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