Automakers are going electric, which means that all the companies that rely on them will have to adapt. Car rental companies have long pledged to make the transition alongside their auto industry partners, and Hertz recently announced that it would be adding the Cadillac Lyriq and Chevy Silverado EV.
Hertz has decided to pay $168 million to settle 364 individual claims that the company falsely reported its own rental cars as stolen. Criticisms date back to 2015 but the issue became national news right around the time the company was also filing for Chapter 11 bankruptcy in 2020. Hertz has since maintained that any erroneous claims made against customers were the result of a faulty inventory system that’s since been fixed. However, the people that were wrongfully accused of the crime – some of which were held at gunpoint by police and even temporarily imprisoned for a felony offense they didn’t commit – have been seeking restitution in class-action suits.
In 1966, Shelby American joined forces with Hertz for its Rent-a-Racer program. Legend has it that the entire thing started as a way for Carroll Shelby to sell 1,001 modified Ford Mustangs, effectively conning the rental agency into paying for the privileges of advertising his products. But the resulting Shelby GT350H has become a bit of a legend, with the surviving examples consistently going for six figures at auction.
In actuality, Hertz was already offering high-performance vehicles years before Shelby got involved and the pair had previously worked together to offer the Cobra in 1962. Their marriage solidified the company’s efforts to occasionally provide customers with the opportunity to drive something truly glorious to drive. While the Mustang (along with the Corvette) remained a staple for North America, Shelby models wouldn’t return until 2006 delivered a second incarnation of the GT350H, to be followed by the 2016 GT-H. Hertz and Shelby American have confirmed a new partnership — one that has resulted in the 900+ horsepower Mustang Shelby GT500-H.
Hertz customers have issued complaints that the company falsely accused them of stealing rental cars. Numerous renters have made claims that they were stopped by police to be informed that the vehicle they had paid to borrow was reported stolen. Complaints became so prevalent that CBS News launched an investigative report last November to uncover whether individuals were simply lying about their innocence to avoid prosecution or if Hertz was habitually screwing things up.
By December, 191 claims had been filed in federal bankruptcy court on behalf of the people who said they were falsely arrested. But it took another two months for a Delaware bankruptcy court judge to issue a ruling that will require Hertz to make the number of renters it accuses of stealing its cars every year publicly available.
Tesla shares took a dip on Tuesday after Tesla CEO Elon Musk tweeted that its deal to provide Hertz with 100,000 electric vehicles had not been ratified with the signing of a contract. While this normally means the deal had not been finalized, the language used by Musk almost makes it sound like whatever Hertz had been claiming previously didn’t even matter.
“You’re welcome! If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet,” the CEO said in reference to Tesla’s share price pitching upwards by over 8 percent. “Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics.”
After managing to avoid what appeared to be certain death, Hertz has decided to purchase 100,000 Tesla vehicles before the end of 2022. Considering the firm was filling out Chapter 11 bankruptcy forms this time last year, the estimated $4.2 billion expenditure designed to ensure that 20 percent of its global fleet is electric does feel slightly frivolous. But Hertz says it’s getting out ahead of the curve and is interested in becoming a “mobility company,” rather than a business that just rents people automobiles.
As you might have noticed, or heard from us, rental agencies have been hoovering up new and used vehicles to offset the 2020 selloff that stemmed from everyone mysteriously canceling their travel plans that year. Returning to normal, which is something anyone who didn’t assume the world was ending could have predicted, has resulted in increased pricing for vehicles — regardless of whether you’re renting or buying.
Rental companies typically try to play the vehicle market like the rest of use stocks or (if you’re hip) crypto. Buy low, sell high. But 2021 has created a perfect storm of increased demand coming after a long stretch of nothing and an auto industry that doesn’t seem to be capable of building cars thanks to all sorts of component shortages. But it’s no sweat for the big rental agencies because they’re now able to charge just about whatever they want. They’re keeping vehicles in their fleets longer, making more money off them, and selling them back at elevated prices.
With rental companies coming off a particularly lean 2020, fleet downsizing turned out to be a necessity for many agencies. Unfortunately, demand for rental vehicles has begun to return and some markets have found themselves operating with an insufficient number of cars. The upside to this is the ability to charge exorbitant fees for models nobody wanted to rent in the first place. But businesses can’t cash in on vehicles that didn’t get rented, leaving agencies desperate for new product that’s been backlogged by the auto industry’s semiconductor shortage.
The solution is a novel one, at least for rental companies. Rather than gamble the business on whether or not supply chains normalize before summer, they’ve been prowling auctions and hoovering up used cars in record numbers.
Rental-car agencies, shunned by a population that didn’t know whether it was safe to go outside for most of the year, have reportedly started to turn things around. While the recovery didn’t come soon enough to save Hertz from having to declare bankruptcy, the summer months were much kinder to the industry as a whole. Despite the likelihood of 2020 remaining an unprofitable year, the final two quarters should help rental groups recoup some of the sustained losses.
A recent assessment conducted by the Wall Street Journal suggested that the industry is benefiting from a population that continues to shun air travel during the pandemic and elevated used vehicle pricing. While discount prices actually hampered Hertz right when it needed a miracle, secondhand auto rates surged through the latter half of the summer and helped stabilize the rest of the vehicle rental industry.
Colossal rental car provider Hertz is on the hunt for life-sustaining cash, but raising it itself now seems out of the question. Hertz Global Holdings, which filed for bankruptcy in May, recently moved ahead with a plan to raise a cool half-billion through a stock sale, only for the Securities and Exchange Commission to step in and say “hey, whoa, no more of that.”
Left with no other option, Hertz is now seeking a bankruptcy loan.
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.
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- 285exp If the conversion to EVs was really so vital to solve an existential climate change crisis, it wouldn’t matter whether they were built by US union workers or where the batteries and battery materials came from.
- El scotto Another EBPosky, "EVs are Stoopid, prove to me water freezes at 0 degrees Celsius" article.It was never explained if the rural schools own the buses or if the school bus routes are contracted out. If the bus routes are contracted out, will Carpenter or Bluebird offer an electric school bus? Flexmatt never stated the range of brand-unspecified school bus. Will the min-mart be open at the end of the 179-mile drive? No cell coverage? Why doesn't the bus driver have an emergency sat phone?Two more problems Mr. Musk could solve.
- RICK Long time Cadillac admirer with 89 Fleetwood Brougham deElegance and 93 Brougham, always liked Eldorado until downsized after 76. Those were the days. Sad to see what now wears Cadillac name.
- Carsofchaos Bike lanes are in use what maybe 10 to 12 hours a day? The other periods of the day they aren't in use whatsoever. A bike can carry one person and a vehicle can carry multiple people. It's very simple math to figure out that a bike lane in no way shape or form will handle more people than cars will.The bigger issue is double parked delivery vehicles. They are often double parked and taking up lanes because there are cars parked on the curb. You combine that with a bike lane and pedestrians Crossing wherever they feel like it and it's a recipe for disaster. I think if we could just go back to two lanes of traffic things would flow much better. I started coming to the city in 2003 before a lot of these bike lanes were implemented and the traffic is definitely much worse now than it was back then. Sadly at this point I don't really think there is a solution but I can guarantee that congestion pricing will not fix this problem.
- Charles When I lived in Los Angeles I saw a 9-5 a few times and instanly admired the sweeping low slug aerodynamic jet tech influenced lines and all that beautiful glass. The car was very different from what I expected from a Saab even though the 900 Turbo was nice. A casual lady friend had a Saab Sonnet, never drove or rode in it but nonetheless chilled my enthusiasm and I eventually forgot about Saabs. In the following years I have had seven Mercedes's, three or four Jaguars even two Daimlers both the 250 V-8 and the massive and powerful Majestic Major. Daily drivers of a brand new 300ZX 2+2 and Lincolns, plus a few diesel trucks. Having moved to my big farm in central New York, trucks and SUV's are the standard, even though I have a Mercedes S500 in one of my barns. Due to circumstances with my Ford Explorer and needing a second driver I found the 2006 9-5 locally. Very little surface rust, none undercarriage, original owner, garage kept, wife driver and all the original literature and a ton of paid receipts and history. The car just turned 200,000 miles and I love it. Feels new like I'm back in my Nissan 300ZX with a lot more European class and ready power with the awesome turbo. So fun to drive, the smooth power and torque is incredible! Great price paid to justify going through the car and giving her everything she needs, i.e., new tires, battery, all shocks, struts, control arms, timing chain and rust removable to come, plus more. The problem now is I want to restore it and likely put it in my concrete barn and only drive in good weather. As to the writer, Alex Dykes, I take great exception calling the 9-5 Saab "ugly," finding myself looking back at her beauty and uniqueness. Moreover, I get new looks from others not quite recognizing, like the days out west with my more expensive European cars. There are Saabs eclipsing 300K rourinely and one at a million miles and I believe one car with 500K on the original engine. So clearly, this is a keeper, in love already with my SportCombi. I want to be in that elite club.