Hertz is selling off most of the cars in its rental fleet. The auto rental firm filed for Chapter 11 bankruptcy protection in May when the biting coronavirus pandemic strangled its business. With the lockdown and restriction of movement, Hertz lost business patronage since people reduced their car rental choices when car-hailing services such as Lyft and Uber among others.
Hertz has almost 700,000 cars in its rental service and is now listing most or all of these for discounted sales at the moment. The used cars are expected to be cheaper for purchase, with Hertz saying any purchased car can be delivered for free within 75 miles radius of the purchase center. Hertz is not the only auto rental company suffering the negative impacts of coronavirus, many other rental companies across the US and the globe are feeling the bite.
Other major companies such as J.C. Penney, Neiman Marcus, and Tuesday Morning among others have filed for bankruptcy since the coronavirus pandemic started. Analysts said Hertz could have been spared much of their financial troubles if they had adopted ride-hailing services using mobile apps like Lyft and Uber among others. With ride-hailing services, people do not need to pay for car rental to drive themselves around in unfamiliar cities when a driver could easily do it at much cheaper costs.
Meanwhile, a search online for Hertz vehicles in Florida yielded nearly 30,000 cars available for outright sale, with a 2017 Hyundai Elantra SE Sedan which had covered 71,000 miles listed for $7,597, a price that car comparison sites state is $1,740 below the actual market price. Another search of Hertz cars within 1,000 miles of Beverly Hills in California revealed almost 21,000 cars available for sale.
Hertz Global Holdings is owing over $24 billion in debts even though they claimed to have only $1 billion available in cash. Hertz is not the only auto rental company that lost money over time with COVID-19, subsidiaries such as Dollar and Thrifty among other car rental brands are also losing considerable revenue.
Before filing for bankruptcy, Hertz tried to raise money on the capital markets without success. The company relieved 12,000 workers of their jobs in March and also furloughed 4,000 others. With a 90% cut in vehicle acquisitions and cessation of all unnecessary expenditures, the company said it hopes to save up to $2.5 billion per year. Meanwhile, the court allowed Hertz to raise $1 billion in new equity capital by selling 246.8 million unissued shares to Jefferies LLC.