COVID-19 impact on rental car companies also hurts automakers

COVID-19 impact on rental car companies also hurts automakersConsumer watchdogs warn that consumers need to gas up before returning vehicles, return a car in time to avoid late charges and think twice about returning and leaving a car in a rental lot after hours. A customer checks in at a Hertz car rental counter in Atlanta.

The rental car business is a mess because of COVID-19, and it's putting an extra dose of pressure on the auto industry, which provides the vehicles.

The coronavirus pandemic has hammered businesses like Avis and Hertz, even pushing the latter closer to a potential bankruptcy filing.

Hertz, in a U.S. Securities and Exchange Commission filing this week, said it won't be shopping for cars any time soon.

"In light of the impact of the COVID-19 global pandemic on the travel industry, Hertz believes it will not need to acquire new vehicles for its fleet through the remainder of 2020," according to the filing.

That means automakers, which are dealing with reduced demand for new car sales even as the U.S. retail market is actually improving, will also feel the pinch of fewer fleet sales for rental cars. Those rental fleet sales do represent a substantial market for automakers, but they are considered less important than retail sales, which generate higher margins. In at least one case, an automaker, General Motors, has agreed to take back some rental cars.

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Cox Automotive says that in 2019 seven automakers represented the bulk of vehicles purchased by rental car companies — Fiat Chrysler Automobiles, Nissan, GM, Ford, Toyota, Hyundai and Kia, respectively.

Michelle Krebs, executive analyst for Autotrader, said a pullback was to be expected. She pointed to data presented by Bloomberg showing leisure, hospitality and transportation among the industries with the highest job losses in April.

"The rental car industry is a disaster right now because of the whole travel industry, and they said early on in this crisis that they were going to cut the number of vehicles in their current fleet so it's not a surprise that they're canceling some orders," she said.

The Detroit Three, she noted, have tried to reduce their fleet sales because those sales are less profitable.

The Free Press reached out to the four automakers with the highest percentage of vehicles in rental car fleets to ask whether they had taken back any vehicles.

As Bloomberg reported earlier, GM has acknowledged that the automaker took back some rental cars.

Spokesman Jim Cain, said an "extremely small number of untitled rental units were transferred to GM dealers."

When asked for more specifics, he called it "less than a rounding error in our monthly sales."

The news service also said FCA had "compiled a list of almost 30,000 vehicles the rental-car companies had purchased and circulated it to other prospective fleet customers" but that the arrangement did not go through.

An FCA spokesman was asked for comment.

A Ford spokesman said he would check.

A Nissan spokesperson said the company "is working together with its dealers and rental car company customers to accommodate requests that address challenges resulting from the impact of the COVID-19 pandemic.”

Messages seeking comment were left for Hertz, Avis and Enterprise spokespeople.

Contact Eric D. Lawrence: elawrence@freepress.com. Follow him on Twitter: @_ericdlawrence.

Source: https://www.usatoday.com/story/money/cars/2020/05/10/covid-19-hertz-automakers/3105639001/

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