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The Honolulu Advertiser

Posted on: Friday, June 13, 2003

Budget drops used-car sales

By Andrew Gomes
Advertiser Staff Writer

One of the state's largest sellers of used automobiles, Budget Car Sales, is exiting the business, in line with a national trend and an internal effort to improve corporate finances.

The company, an affiliate of Budget Rent A Car Corp., has been winding down retail auto sales quietly in recent months and will close its main dealership near Honolulu airport July 11.

The change is being made by Cendant Corp., the giant conglomerate that bought Budget out of bankruptcy in November and has since been trying to improve Budget's business.

"As part of our evaluation of the future of Budget and how to bring it back to financial health, the decision was made to focus on our core rental operations," said Ted Deutsch, a spokesman for Cendant Car Rental Group in New Jersey.

Some 37 local Budget Car Sales employees will lose their jobs as early as today, though others will continue working until July 11. All employees let go will receive severance packages, Deutsch said.

Budget sold roughly 1,000 used cars a year in Hawai'i, and was regarded by other dealers as one of the five biggest used-car businesses in the state.

Budget dealt largely in year-old Ford models from its rental fleet, but sold other makes. The company also accepted trade-ins and offered financing.

On Maui, where Budget Car Sales closed in March, the company advertised Toyota, Nissan, Dodge, General Motors, Chrysler, Jeep and Lincoln models in addition to Ford.

Dave Ward, general sales manager at Honolulu Ford, said he expects a significant increase in business because of Budget's departure.

"Those buyers are going to go somewhere," he said. "Anytime you lose a major player, it's going to have an impact. It's competitive."

Budget will arrange for manufacturers to repurchase its Hawai'i rentals at set prices after an average of seven to 10 months of rental use, Deutsch said. The cars, he added, will likely be resold through other dealers in the state.

Staying out of the used-car business is common today for car rental firms, according to Deutsch, who said the practice was more standard 10 or 20 years ago. Depending on the market, car rental companies could make or lose a lot of money selling their briefly used fleets — a risk Cendant wanted to avoid.

In Hawai'i, Hertz maintains a small sales operation near Budget, which is at 455 Kalewa St. Other car rental firms sell their vehicles wholesale to other dealers or send their cars to the Mainland for sale.

Cendant, which also owns Avis Rent A Car, said 95 percent of its 2002 rental vehicles were subject to repurchase programs. The Hawai'i used-car sales operation was one of a remaining few for Budget.

"This is winding down car sales really nationwide," Deutsch said. "This is a business that we are getting out of."

Budget Rent A Car operates about 1,900 locations around the world, and has roughly 600 employees at 20 locations in Hawai'i.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.