Hertz Given Approval to Dump 200,000 Vehicles ASAP
While negotiating the terms of its bankruptcy with creditors, Hertz has been informed that it can sell 200,000 would-be rental vehicles to help cover its debts.
According to a filing with the U.S. Securities and Exchange Commission (approved Friday in the U.S. Bankruptcy Court in Wilmington, DE), Hertz will be allowed to “dispose of at least 182,521 lease vehicles” between now and the end of 2020. Proceeds will then be used to pay off $650 million it owes lenders, with most funds going toward principal payments on financed vehicles.
With the pandemic knocking out manufacturing for months, this is likely welcome news for buyers eyeballing the secondhand market. Dealer lots are light on fresh product at present and times are getting tougher for consumers, making used vehicles all the more appetizing. Even though former rentals have a tenancy to be abused, they typically to go for a bit less than something living a more carefree existence — and Hertz will be desperate to offload them quickly.
Of course, used rental cars were already a bargain as they cost 5-15 [percent] less than what used car dealers charge. The discount varies by model, but a recent study showed Hertz vehicles are typically priced 8.0 [percent] below market value for an average savings of $1,389.
That same study showed the best bargains were on the BMW 7-Series, Chevrolet Trax and Mercedes A-Class. Customers can also score big discounts on the Infiniti QX50 and Toyota Tundra.
Hertz will make those sales as easy as it possibly can to ensure customers clean up its inventories, and it has loads of used models it’s itching to get rid of on its website. You’ll probably be able to talk them down on the price, too. Just remind them that they’re the ones that need to make the sale to continue existing.
Assuming everything goes according to plan, Hertz Global Holdings has a real chance to keep lenders off its back for another year and return to business as usual with a much smaller footprint (and fleet). But that’s the best-case scenario. Eventually the company has to resume normal operations or continue selling its fleet (totaling around 500,000 units before the big sell-off) until there’s nothing left. Hertz’s management of the crisis will play a major factor, though the final outcome will also be dictated by how the world responds to the ongoing pandemic.
If normalcy fails to return sometime in 2021, and rental demand remains severely depressed, Hertz will undoubtedly go belly-up.
[Image: Hertz]
Consumer advocate tracking industry trends and regulations. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied, he pivoted to writing about cars. Since then, he has become an ardent supporter of the right-to-repair movement, been interviewed about the automotive sector by national broadcasts, participated in a few amateur rallying events, and driven more rental cars than anyone ever should. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and learned to drive by twelve. A contrarian, Matt claims to prefer understeer and motorcycles.
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I bought a Hertz rental and it took 3 months to do the deal - title, tags, etc. I can't imagine them selling 200,000 cars.
Hertz will run these 200k cars thru an auction and dealers will be the buyers. An auction is the quickest way to dispose of these vehicles and get the cash Hertz needs.