J.D. Power Valuation Services (formerly NADA Used Car Guide) recently rolled out a white paper aimed at tackling two important questions when it comes to the impact off-rental has on the wholesale market.

Analysts explained that the percentage of total new vehicle sales sold to rental companies — what is termed rental fleet penetration (RFP) — generally stands at about 10 percent to 13 percent, representing roughly 1.5 to 2 million vehicles.

“Their entrance into the used market generally occurs within one to two years after being purchased new — or much sooner than the typical retail consumer purchase or lease,” J.D. Power said in the white paper. “In addition, rental fleet companies tend to sell large quantities of off-rental units around the same time.  More often than not, the concentrated influx of off-rental supply places negative downward pressure on used vehicle prices.

“A second concern involves the relationship between high RFP and automaker brand value,” analysts continued. “For example, brands or models consistently associated with high RFP frequently exhibit weaker quality or reliability characteristics—or are perceived less favorably by consumers.”

With that set of scenarios as a backdrop, J.D. Power wanted to address a pair of open questions, including:

1. How large is the negative pressure on used vehicle prices from increased supply resulting from new vehicle sales to rental companies?

2. Supply impact aside, do rental fleet sales have a longer-term impact on brand value factors, or is high RFP more a symptom of pre-existing brand weakness?

“This paper explores the relationship of rental fleet sales to used vehicle prices through two conjectural mechanisms: The first is through an increase in supply volume; the second is through damage to brand reputation and brand value,” analysts said in the J.D. Power white paper that can be downloaded here.