Hertz enters the used car business

HERTZ Australia has entered the used car business in Sydney's Parramatta Road with a pilot operation that will offer "no-haggle" pricing on nearly-new cars available to the public.

No-haggle pricing of nearly-new, ex-fleet or ex-rental cars is the business model successfully pioneered in the US by CarMax as a way of taking the stress and uncertainty out of buying used cars, with no need to horse trade with sales staff.

CarMax has gone on to become one of America's most profitable auto groups, posting a net profit of more than $160 million in the year to February 28, 2003.

The trend by rental and leasing companies to offer no-haggle pricing will put increasing pressure on car dealers to look more closely at no-negotiation policies as the public gets used to the idea of non-negotiated car purchasing.

The move is a further erosion of the grip car dealers have over used car marketing in Australia.

If more leasing companies follow suit, it will reduce the amount of nearly-new vehicles available from auctions for dealers' used car stock.

Hertz is joining the leasing group, Orix Australia, which began retailing its ex-fleet cars in the late 1990s. Orix charges between wholesale and the price a buyer would expect to pay from a dealer. Most, but not all, Orix outlets have a no-negotiation policy.

The move into retailing by fleet and rental companies is designed to recover more value in their vehicle assets than they have become accustomed to receiving at auction.

Hertz Australia's operation, Hertz Car Sales, will open in Parramatta Road, Granville, on Friday and will initially offer up to 30 ex-Hertz rental vehicles that are not subject to manufac-turer buy-back agreements.

The national fleet manager for Hertz, Stephen Short, said the first vehicles to be offered by Hertz Car Sales would range from four-cylinder Ford KAs, Mazda 121s and Nissan Pulsars to Holden Commodores, Toyota Tarago vans and a small number of Ford Mustang convertibles.

Mr Short said used vehicle prices would be typically $11,200-$12,200 for a Mazda 121, $37,300-$38,700 for a Toyota Tarago and about $55,000 for a Mustang.

Stock will be nine to 24 months old, retain the balance of the manufacturer's warranty, carry an NRMA inspection and be reconditioned to bring them up to a high standard.

Hertz Car Sales will not take trade-ins. Finance referrals are still being organised.

The availability of cars for sale will be promoted to Hertz rental customers. A website will soon be unveiled to showcase the vehicles available through Hertz Car Sales.

The managing director of Hertz Australia, James Bowyer, said that once the Granville facility was operating successfully, Hertz would consider expanding to other sites, initially in Sydney and later to regional and interstate locations.

Orix has found that regional locations work better than capital cities because they bring attractive used car stock into provincial towns, have lower property costs and lower advertising costs.