On land, on the sea and in the air: the travel industry after 9-11; the travel industry was particularly hard hit after the Sept. 11 terrorist attacks. Airlines, cruise lines and rental car companies are each grappling with different problems on the road to economic recovery - Regional Focus - Brief Article

EconSouth, Summer, 2002

Used-car bargains shine in Florida.

In the days following the Sept. 11 attacks, the big three U.S. auto manufacturers announced their intention to keep America on the move through rebates, zero percent financing and other offers that were unprecedented on such a broad scale. The incentives were largely successful, as witnessed in the Southeast region, where new cars registrations in October 2001 exceeded August registrations in every, state.

While new car sales numbers have been lower in 2002, they remain at impressive levels, especially considering the state of the economy. There is, however, one notable exception: Florida. New car registrations in Florida were down 20 percent from December through February, compared to a decline of 5 percent in the rest of the Atlanta. Fed's district and a nationwide decline of around 3 percent (see the chart).

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The decline in new car registrations in Florida, is largely a result of the fleet. downsizing taking place in the rental car industry. According to data provided by R.L. Polk & Co., total new car registrations in Florida declined 24 percent, 27 percent and 7 percent in December 2001, January 2002 and February 2002 from the prior-year month, while rental car registrations in the same period fell 56 percent, 51 percent and 12 percent, respectively. The numbers are particularly large in Florida because rental cars account for a disproportionately large portion of automobiles in the state. According to Keith Cobb, former vice chairman and chief executive officer of Alamo Rent A Car Inc., ANC Rental currently rents more than 15,000 cars in Orlando alone (although that's down from more than 20,000 before Sept. 11). As a consequence, rental car registrations as a percentage of new car registrations have declined in the last several months. According to the R.L. Polk & Co. data, rental cars accounted for an average of 35 percent of all new car registrations in Florida from October 2000 through October 2001. From November 2001 through March 2002, however, that figure fell below 29 percent.

This development also suggests that, in Florida the rental car industry may be affecting new car sales in more ways than simply by buying fewer new cars. By dumping so many rental cars on the market, the price of barely used cars may have become so low in Florida that they're more attractive than new cars, even with the manufacturers' incentives. In any event, for the next few quarters the Sunshine State might realistically, if reluctantly, consider a new distinction: the used-car state.