Consumer demand for smaller cars is putting car-rental companies in a bit of a bind. Until recently, American automakers were glad to unload overstock to Hertz, Avis, and Thrifty at a discount, then guarantee a price to buy the cars back used. But with demand for hulking American cars dropping, Detroit has cut back production and is finding the arrangement with Big Rental less to its liking. Car-rental companies are now paying as much as 40 percent more for cars, and finding it more difficult to unload the used ones. And rental lots full o’ SUVs aren’t meeting customers’ needs: In April and May, bookings of compact and economy rental cars were up 10.2 and 14.3 percent over those months in 2007, while mid-size, luxury, and minivan rentals were down 1.5 percent, 24 percent, and 15.3 percent. “Just six months ago, anybody would have taken a Chevy Trailblazer SUV in lieu of a four-cylinder Cobalt. Not now,” says one rental-company consultant. “That’s a big deal. That’s 25 years of history changing.”
