Car rental companies and the cultural shift away from ownership

Immediately after the end of World War II, we were seized with a sense of great confidence. It was as if anything was possible. Although we then dropped into the Cold War, we never really lost that sense of optimism. One of the ways in which we celebrated this positive sense of progress was by becoming a more materialistic society. Before the war, most people rented their homes and rarely bought large items like cars. After the War, employment was available to all, pay was good and credit became available. Suddenly, we could dream of ownership. Now fast-forward to modern times. We've had the official rate of unemployment stubbornly over 8% for three years now. In fact, the true rate is far higher, particularly among the young.

The result is that people in the age range of 20 to 34 are abandoning the idea of ownership. Mortgages are hard to find. Auto loans and credit cards are also difficult because many of the unemployed have large unpaid student loans and so weak credit scores. The culture is therefore shifting so the young adults stay home with their parents and only rent what they need. That way, they stay flexible in the face of uncertainty. This has produced a boom in car rental companies offering rental by the hour, a market sector dominated by young adults who have no money saved and little guaranteed disposable income.

So long as people resist retail sales, the general economy is going to remain flat. Why buy when you can borrow from a friend or rent for a few dollars? We can see the results on Main Streets across America with more shop being shuttered every day. Even if the banks and other lenders reverse their policies and begin to make more money available, this resistance to ownership could have become entrenched. It may be the new generation will resist borrowing until they have the confidence they will command the better paying jobs for the foreseeable future. Until then, the car rental companies look set to continue increasing their profits by supplying this market.