If dealers aren’t already looking through the rental-risk unit run sheet at the auctions where they typically buy inventory, perhaps they should be — considering what might be crossing the block nowadays.

“It’s interesting as we note the typical rental-risk unit comprises a much more diverse mix of models, makes and colors than there used to be in the past. That’s good,” Cox Automotive chief economist Tom Webb said. “There are a lot of different options for a dealer when looking at the off-rental units. They can probably buy something that their customer wants.

“The rental fleet is much more diverse. Certainly, it’s skewed to the car side, but a lot of small crossovers because the rental car companies are doing a good job of remarketing them. You’ve got those specialty high-line rental units now, which is also a good thing,” Webb continued.

“Even with the models, the rental car companies do a much better job of contenting the vehicle like a traditional retail unit as opposed to in the past where you could say ‘that’s a rental unit’ because it’s got crank windows or something. Those days are past. There used to be a time where all those were painted white, which was not good either for residual values. It’s a much nicer spectrum of vehicles,” he went on to say.

A year ago when Auto Remarketing compiled its annual report about the off-rental market, Manheim noticed mileage for these units at an all-time high. A streak of four consecutive quarters for mileage increases left the average well above 50,000 miles, more than double the figure Manheim spotted in early 2007.

“The average mileage now is more in tune with what we’ve seen since this recovery started,” said Webb, who put the average at the midpoint of this year at about 38,500 miles. “It’s more like the 2009 through 2014 time period.

“A lot of that was caused by Hertz, primarily the second quarter of 2015, where it hit record highs. They were going through a lot of management changes and they had issues with SEC filings so they just kept their units longer,” Webb added.

Over at KAR Auction Services, executive vice president and chief economist of ADESA Analytical Services Tom Kontos isn’t seeing as much of an average mileage drop-off. Kontos indicated the average mileage for rental-risk units going down the lanes at ADESA is still near 50,000.

“That’s the data I get from our auctions. Maybe more broadly, the trend isn’t quite so high. But at least the units we’re selling at ADESA, we’re seeing pretty high mileage,” Kontos said.

Still, Kontos agreed that off-rental vehicles are a hit with dealers, especially if they can obtain highly coveted program units during closed factory sales.

“The consistency of those (program) vehicles is what it’s always been,” Kontos said. “If they’re not already in good condition, the manufacturers do what they can to recondition them. Those units are always some of the better cars available to dealers at auction.

“The demand and attractiveness of off-rental vehicles is probably better than it already was because it was already pretty good,” Kontos continued. “The rental-risk units have been attractive to franchise dealers because they’re in the younger age category — a current or 1-year-old model.

“What I would add that’s different today is the popularity of certified pre-owned vehicles, where the off-rental unit does lend itself to very well,” he went on to say.

ABC St. Louis general manager Todd Ritter concurred with Kontos’ assertion about the connection of CPO and off-rental vehicles bringing out the hammer at his auction each week.

“I think dealers have always used rentals to fill spots on their lots. With the growth of CPO, we definitely have seen an increase in demand for these vehicles,” Ritter said.

Rising off-rental supply

Both Webb and Kontos pointed out supply of off-rental units in the wholesale market is on the rise simply because rental car company fleets are growing.

“Since the recession ended, new vehicles into the rental fleets have gone up,” Kontos said. “Now it’s not been disproportionate to the growth in new-vehicle sales in general, so it’s not as if manufacturers have been favoring rental sales to the degree they might have before the recession.

“The fact of the matter is there has been growth of new vehicles into the rental fleet, and therefore you would expect growth — and there has been — in off-rental volume over the last few years at auction,” he continued.

And like Webb mentioned, the diversity of rental-risk volume has expanded. No longer are the rental lanes full of domestic, four-door sedans painted white with not many features beyond an engine and transmission.

“The actual volumes are spread across a wider array of manufacturers than there used to be in the past where it was traditionally GM, Ford and Chrysler. Actually GM, Ford and Chrysler’s share of sales into rental is now less than it’s ever been,” Webb said.

“The sales into rental are actually front-loaded into the first part of the year so we’re up about 6.7 percent year-to-date through July,” he continued.

“The interesting thing this year that has gotten a lot of press is General Motors has pulled back very dramatically from new-vehicle sales into rental this year whereas some players have increased,” Webb went on to say.

And while GM might be delivering fewer units to rental companies, what the automaker is doing in the remarketing department is disciplined, too. ABC St. Louis runs hundreds of GM units down its lanes each week.

“Our major rental account (GM) has a standard risk turn-in policy, so they have stayed fairly consistent,” Ritter said.