In the midst of the coronavirus pandemic, the rental car company Hertz filed for Chapter 11 bankruptcy due to poor business.
As a result, Hertz plans to sell off a large part of her rental car collection.
Car dealerships across the country may stock up on Hertz’s used cars and sell them to consumers at a price just right.
“I owned car dealerships for — ran them for more than 30 years and I haven’t seen something that impacts the used car market like this,” said Barton Hankins, Crain Automotive’s chief executive officer. “It wasn’t what we anticipated it to be in the summer. Obviously, it was hard on business as well as hard on our employees and their families too.”
Although sales have declined, Hankins sees the car industry as a glimmer of hope. Hankins believes people will become more comfortable hitting the road from the gradual lifting of restrictions to an energized economy.
There’s always the possibility of Hertz selling 30 thousand rental cars a month until year’s end. But according to industry experts this is a slippery slope.
“The consumer should be able to get quite a deal in terms of buying a vehicle. My concern is with trade-in values going to drop and then what about those consumers who want to trade in on say a new vehicle or trade-in on a used vehicle. I don’t really see enough inventory to supply the demand. That we’re going to have with the exception of used cars if they release that many,” Hankins said.
The auto-industry ‘s last big hit occurred during the 2007 financial crisis.
COVID-19 ‘s effect on travel demand was unexpected and drastic, triggering an immediate drop in client sales and potential bookings, “the firm added. “Hertz took decisive steps to emphasize employee and consumer health and safety, remove any non-essential spending and maintain liquidity. However, there is doubt as to when income will recover and whether the used-car industry will completely reopen for purchases. Which has necessitated the intervention of today. The financial reorganization will provide Hertz with a roadmap toward a better financial system. It will help prepare the group for the future. As it navigates what could be a protracted travel and global economic recovery overall.