Thursday, September 24, 2020
News Hertz Impending Bankruptcy May Severely Hurt The Deflated Used Car Market

Hertz Impending Bankruptcy May Severely Hurt The Deflated Used Car Market

Idled rental fleets at Hertz have caused a cash crunch and pushed the company to the brink of extinction


  • Mismanagement and debt have plagued the company for years.

  • The pandemic has all but killed rental car companies.

  • Hertz owns the vast majority of its fleet, contrary to its competitors.


All companies and services related to travel and tourism have been hurt by the pandemic. Rental car agencies are no different. Typically, in tough times, car fleets are trimmed via sales or returns in order to slow financial losses. In the US specifically, the used car market has taken a hit from slowed sales amid the pandemic and an influx of hundreds of thousands of cars from Hertz will only further devastate the used car market – over 560,000 in the US alone.

While part of the story may be that Hertz could be forced into bankruptcy due to their crushing $21 billion debt, what is of particular interest to us is the fact if all 3,000+ locations end up liquidating their fleets, the damage to the already struggling used car market will be catastrophic. Because it owns up to 89% of its fleet, compared to 66% for Avis Budget Group, Hertz will need to offload them and not “return” them.

2018 Volvo XC60 T8
Volvo XC60 T8 | Photo: Olivier Delorme

The impact is double fold, in a way, as a slowed used market will show little interest at auctions to buy these vehicles, further pushing down their value. Now, the upside could be loads of cheap late-model cars and SUVs to buy for consumers, which is the case, but sales have declined by up to 70% in April.

A perhaps unexpected side-effect to this will be manufacturers, such as GM, Volvo, FCA, Nissan, and others, will be forced to lower residual values on their leases. This will negatively impact leasing’s relative affordability. This is an ongoing story.

Hertz has until May 22nd, tomorrow, to work out a deal with its lenders and bondholders

2019 Nissan Rogue
Nissan Rogue | Photo: Nissan

Trending Now

Hennessey Dynos A 2021 Chevrolet Tahoe High Country 

The idea was to see how much power it develops. This Tahoe has a few modifications but they change little output-wise. The 2021 Chevrolet Tahoe, and...

Unifor Announces New EV Production for Oakville, V8 for Windsor

Tentative deal first in Canadian Union auto negotiations Five new electric models from 2025-2028 Unifor and Ford have reached a tentative deal in the...

Hot New Volkswagen Golf GTI TCR Spotted At The Nürburgring

The Golf GTI TCR is like a GTI+. It bridges the gap between the GTI and Golf R. Power is said to be...

GM Design Shares Vision Of A Cadillac Pickup

The Escalade EXT went out of production in 2013. It wasn’t a very big seller, despite its size. A Cadillac pickup is highly...

Rolls-Royce Ghost Extended Grows By 6.7 Inches

Rear seat occupants treated even more like royalty. Driving dynamics are unaffected by the extra length. Rolls-Royce has always known how to please its...
Matt St-Pierre
Matt St-Pierre
Trained as an Automotive Technician, Matt has two decades of automotive journalism under his belt. He’s done TV, radio, print and this thing called the internet. He’s an avid collector of many 4-wheeled things, all of them under 1,500 kg, holds a recently expired racing license and is a father of two. Life is beautiful. Send Matt an emai

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.