How do rental car companies make any money?

Question

The rental car company by my bodyshop has about 10 people working in there office and rents cars from $20-$40 a day. How do they make any money?

Answer 1

I was told by a friend that works for a popular rental company they make money when they sell the vehicle at the end.

Answer 2

My profession is accounting, and trust me, car rental places make money.  Sure, they will advertise $20 - $40 per day, but look at some of the upgrade rentals.  2 years ago, I rented a Hertz Shelby Mustang for 6 days and paid over $1,200.  It was totally worth it.  I had a blast with the car.  If you figure that the car costs Hertz about $600 - $700 per month, the car starts to contribute to the margin after the 4th rental day per month.  If they rent it for 20 days in a month, they take in $4,000 in revenue.

Most rentals are for mid-size cars to business travelers who charge the expense with a company credit card.  Often, it will cost $70 - $90 per day just for the car without add-ons.

There are also other charges that are tacked on when you rent, such as supplemental collision and personal property insurance that many renters select, but often never use.