Hertz, Car Rental Pioneer, Files for Bankruptcy Protection

New York Times ^ | May 22, 2020 | Niraj Chokshi

[John W]

Hertz, which started with a fleet of a dozen Ford Model T’s a century ago and became one of the world’s largest car rental companies, filed for bankruptcy protection on Friday after falling victim to its mountain of debt.

The coronavirus pandemic has devastated Hertz by grounding business travelers and tourists, making it impossible for the company to continue paying its lenders. A sharp drop in used car prices has also decreased the value of its fleet.

“They were doing quite well, but when you turn off the revenues and you own all these cars and all of a sudden the cars are worth less it’s a very tough business,” said John Healy, an analyst and managing director with Northcoast Research in Cleveland.

By the end of March, Hertz Global Holdings Inc. had racked up $18.7 billion in debt with only $1 billion of available cash.

[SkyPilot]

I guess this means there will be a glut of 1-3 year old used cars available in the near future for very reasonable prices.

No, see my previous post.

[SkyPilot]

The individual(s) who came up with the idea of shutting this nation’s economy down...even for a day...should be hanged.

The President went along with it you know. I suppose it can be argued that he had little choice, or maybe he did. But it cannot be argued that he didn't go along.

[SkyPilot]

I'm expecting commercial real estate to collapse at some point which will also cause bank failures.

You are correct. Commercial real estate was in trouble before all of this happened.

There is now a concrete anchor on the legs of those who hold commercial mortgages for malls, office parks, etc. I know several small business owners who told their accountants last month they are finished.

Restaurants will never recover with the chains and restrictions being proposed (50% capacity, plastic barriers, etc.)

The economy could resurge, but the economy is vast, complex, and not monolithic.

Certain sectors could recover relatively fast, while others will linger or die.

You don't put 35,000,000 people out of work in a just a few weeks and expect to restart the burner.

The cult of the mask and social distancing must die, or the economy will never fully recover.

[Gay State Conservative]

To a degree he went along with it.But it was established early on that he didn't have the authority to "shut down" a particular state,or region.I guess he did have the authority to shut down the Federal Government...which he did...and he certainly had the authority to seal the borders which he wisely did.

Add to that the advice he was getting from "experts"...who were probably Swamp Creatures...and we find ourselves in this $hitstorm.

Blame? 90% "experts" and Rat Party officeholders/operatives...10% Trump.

[SkyPilot]

Fair and good post. I agree.

[bert]

And..... a us Navy vet who served on the carrier Enterprise and who donated millions to the Museum of Naval Aviation in NAS Pensacola,dominates the renta car market with his company called Enterprise Car Rentals

[Spktyr]

And what people like you always seem to ignore is that a lot of these companies were grossly mismanaged for years. The responsible execs are often using the COVID-19 pandemic as an excuse to cover their misbehavior and escape consequences. See how many big companies and organizations decided to raid the various small business aid programs recently.

To go from the generic above to the specific here, Hertz has been mismanaged for years. The entire board and leadership need to go, but they will stay on and possibly blame the prior years of failure on COVID-19, somehow. Or just deny responsibility and say everything was fine (as was stated in the article) until COVID-19 came along and trashed everything. Or both. Their stock has fallen off a cliff since 2014; that decline was NOT recent.

Point is, no few companies that are tanking in this time were going to tank anyway and were already doing poorly. The pandemic either just happens to be at the same time, has finally kicked them over the edge or it’s being used as an excuse. These companies should get little sympathy. The companies that *were* doing well prior to this are the ones that are of more concern.

Put another way, your logic can also be displayed as you basically claiming that Sears went bankrupt due to a singular event, their poor last Christmas season and decrying people that point out that Sears was in trouble for years and years before then.

[Dilbert56]

Always available. We’ve bought three cars from Hertz. They’re generally a year to a year and a half old with 30-40,000 miles on them. They run $800-1,000 below Kelly Blue Book. We’ve had mechanics tell us we got great deals. It’s the flip side of the depreciation that happens in the first year of a car’s life. Hertz takes the hit but doesn’t care because of the rental income. They just need to get rid of them. First one was Rent to buy. Other two were off the lot which I would recommend.

[John W]

You are right. He allowed this. The buck stops with him.

[Disambiguator]

Car rental companies take the depreciation hit, but it’s an expense they use to reduce taxable income, so it’s not a big deal. It’s part of their overhead.

A person just buying a car for their own use doesn’t have that option.

[bert]

Everybody should have a corporation

[Shark24]

Hillary knows best:
“I can’t be responsible for every undercapitalized entrepreneur in America,” Mrs. Clinton said in 1993, responding to charges that her plan would bankrupt businesses and cut employment.

[Yogafist]

Trump went along with the shut down, but what is worse, he did not seem to focus on the damage it was doing to the economy. We had weeks and weeks of the two doctors telling us we were all going to die, even when the information showed only a very small segment of the population is truly at risk. As soon as the shutdown began, there should have been a much greater effort to resume as much of the economy as possible. You just can’t let panicked reaction continue without taking a breath and analyzing what it really happening.

[dfwgator]

[SunkenCiv]

Hertz is going to liquidate its rental inventory, be prepared for good deals throughout the used car market. If Hertz had any sense, it would farm this out to Carvana or a similar online service.

• Hertz Prepares to File Bankruptcy If Monday Deadline Is Missed [2020]
• Hertz cuts ties with NRA [2018]
• At Hertz IT, sheriffs, shock and tough choices [employee layoffs for H1B Outsourcing] [2016]
• Rental car toll fees stir backlash that threatens Florida’s image [2015]
• Hertz puts cameras in its rental cars, says it has no plans to use them [2015]
• Hertz fires 25 Muslim drivers who refuse to clock out [2011]
• Hertz fires 26 Muslim shuttle drivers who refused to clock out for prayer breaks [2011]
• Hertz fires 26 Muslim employees over prayer breaks [2011]
• Hertz Fires 25 Muslim Drivers in Break Dispute [2011]
• Hertz suspends 34 Muslim drivers in prayer dispute. [2011]
• Hertz suspends Muslim workers for praying on job [2011]
• Hertz suspends Muslim shuttle drivers in Seattle [2011]
• Electronic Toll on Golden Gate Bridge Can Cost Tourists Hundreds [2011]
• Mom and kids find loaded gun in rental car [2011]
• Former J.P. Morgan Banker James Hertz Pleads Guilty to Municipal Bond Bid Rigging [2010]
• Former Hertz employees sue company over special "prayer breaks" given only to Muslims [2009]

[SamAdams76]