By purchasing a large number of vehicles cars or vans at significant discount from vehicle manufacturers rental companies then rent them out to clienta at a profit.
There are three main business models that a long term car rental company operates.
Own Outright – This is where the rental company purchases the vehicles outright then disposes of the vehicles at the end of the rental period. This way the car rental company i staking the full risk of the vehicle. If the vehicle does not produce the rental expected and then sells for less than expected at auction it can be a costly risk.
Lease – A rental company can sometimes lease cars from a leasing company at a fixed monthly amount – all they have to do then is make sure that they can rent the vehicle out on a regular basis to cover the leasing company costs plus make a profit.
Buyback – A buyback is where a car manufacturer sells the vehicles to the car rental company at an agreed discount. The rental company then runs the car on fleet for an agreed duration or mileage. The vehicle is then re-sold back to the manufacturer at a previously agreed price. This is a much less risky form of operation and one that most rental companies prefer.
In the UK, the registration of rental cars can be concealed by using unfamiliar initials or subsidiaries. This can consequently increase the resale value via manufacturer or third party dealers.