Why car rentals charge $25 where it costs over $15,000 to purchase the car

A major car rental company usually buy new cars in large volume and gets huge discounts from manufacturers. On top of that, car rental companies only keep their cars for a period of 2 to 3 years before reselling them. Suppose that for a period of 2 years, a $15,000 car would depreciate to $9,000, that means the rental company needs to at least make $6,000 in two years out of that single car. If the car is rented out 4 times a week at $25 a day, that means it makes $400 in one month. In a year it will deliver $4,800 and before the car is sold it would deliver the car company a total of $9,600 noting that a new car requires less maintenance costs. If the depreciation of the car is $6,000 in two years and made $9,600 before it was sold, it gave the company a minimum of $3,600 in profit. That is just the advertised price of the car, if you add additional charges such as fuel surcharge if you forgot to refill it or insurance costs, profits are generally decent.

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