Our new hire at GMU, Ilia Rainer, posed this question over lunch yesterday. Why don’t rental car companies use the superior Japanese product? Our group came up with a few hypotheses:
1. Rental car drivers consume patriotism by using the American product. Often a third party, such as a corporation, is picking up the bill. Rental car companies don’t want a "foreign" image.
2. Rental cars are (and must be) well taken care of by Hertz and others. Japanese cars perform better when maintenance is low, but with plenty of care American cars do just fine.
3. Here is a variant on #2: Rental cars have higher value on the resale market than regular used cars, given that they are well taken care of. This boosts the value of U.S. cars relative to Japanese cars, since Japanese cars will hold up anyway.
4. The fraud problem in the auto repair market is severe. If you can fix your cars yourself, at marginal cost, U.S. autos are a fine buy.
5. U.S. cars are more comfortable for long drives, which makes them better suited for the rental market. They are also better for "nature driving" out west. Japanese cars are better for daily commutes, urban driving, and stop-and-go driving, which are more likely found in your daily life and less likely relevant for the rental market.
But surely you can do better. Your thoughts? Comments are open.