Since pretty much no one is traveling these days under shelter-in-place orders, there's no question all transportation is hurting. Car sales, thankfully, are showing signs of life. Ridesharing, and rental cars, however are not doing so well. One of the biggest car rental companies, Hertz, has been hit hard by the fallout from the COVID-19 pandemic, and they almost had to file for bankruptcy. They just got a last-minute reprieve that might just save them. Lenders granted Hertz Global Holdings Inc. more time to come up with a plan after it missed debt payments.
As a result, Hertz now has until May 22 to “develop a financing strategy and structure that better reflects the economic impact of the Covid-19 global pandemic". Hertz had previously been discussing how to lighten its financial burden in order to avoid bankruptcy, and they even entered discussions behind closed doors using advisors like FTI Consulting Inc., which specializes in restructuring and bankruptcy situations just like Hertz's.
Hertz missed lease payments of some of its rental car fleet, which pushed the company to consider the bankruptcy option. In terms of a strategy going forward, Hertz will likely flood the used car market with some of their current lot of vehicles which currently amounts almost 600,000 vehicles. They already sell a number of their vehicles online, but Hertz will have to sell more of them in order to free up cash and to use cars no one is driving right now.
Hertz shares have taken big hits since March, and they're now around the three-dollar mark, which is very close to their 52-week low. The fact that the transportation industry won't recover for many months is an indication of the hurdles Hertz will face as they strive to restructure and get their act together. Ridesharing companies like Uber and Lyft gave the one-two punch to rental car companies a few years ago, and now it's just that much worse.
The upside is that if you're looking for a great car deal, you might want to head to Hertz Sales to get a nearly new vehicle that's been certified by Hertz with a 115-point inspection. Some of their fleet tends to have very high miles that are about double the average annual mileage for a vehicle, but the prices are very good. It's probable that some lower mileage cars will become available in this next wave due to Hertz's need to move cars quickly. Hertz Car Sales also provides:
- A 12-month/12,000-mile limited powertrain warranty on all Hertz Certified used cars, with additional protection plans available.
- They also have a Rent2Buy program that provides a 3-day test rental in order to decide if the car is right for you.
So, as you're going through your own financial struggles during COVID-19, you might want to consider one of Hertz's used fleet cars if you're in need of transportation, and you want to save money.