Tuesday, June 2, 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

The New 2021 Mercedes-AMG E 53 Coupe And Cabriolet: AMG Power, Efficiency And Technology

EQ Boost mild-hybrid technology is the route to power and efficiency. Both Coupe and Cabriolet receive visual and the full AMG treatment. New...

The Latest Lego Technic Is a Sweet 3,696-Piece Lamborghini Sián

Only 63 examples of the real Lamborghini Sián will be made. It was introduced at the 2019 Frankfurt Auto Show. The Technic Sián...

Dodge Challenger ACR Could Be Coming in 2021

Dodge Challenger ACR performance version apparently coming next year Would be third ACR model after Neon ACR and Viper ACR ACR version would...

Looters Hit Dodge Dealer in California, Make Off With Hellcats

An FCA dealership in San Leandro, California was raided during protests related to the death of George Floyd Dodge Challenger Hellcat, Charger Widebody,...

New Ford Edge ST-Line For All The Ford Performance Inspired Looks

Edge ST-Line includes all the visual go-fast bits including 20-inch wheels. Power comes from the standard turbocharged 2.0-litre engine. New Ford Edge ST-Line...
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 1,400 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.