Hertz filed for bankruptcy earlier this year as the coronavirus pandemic ground travel to a halt and largely eliminated the need for rental cars.
While the company is still working its way through bankruptcy, the company reached an agreement with creditors this summer to “dispose of at least 182,521 lease vehicles between June 1, 2020 and December 31, 2020.” That would significantly cut the company’s fleet of approximately 500,000 vehicles and could send used car prices tumbling.
However, the news today is a bit surprising as The Wall Street Journal is reporting the company is supporting a proposed asset-backed securitization deal worth $400 (£315 / €344) million. Those funds would be used to acquire new vehicles.
Also Read: Hertz Files For Bankruptcy, Raises Fears It May Flood Market With Hundreds Of Thousands Of Used Cars
While it seems odd that a bankrupt company is thinking about buying new cars, the publication notes Hertz wants to “welcome customers back with new vehicles” when travel returns to pre-pandemic levels. There’s obviously some logic behind this as having a fleet of antiquated vehicles isn’t ideal as it could cause customers to flock to competitors with newer vehicles.
The deal would also be good news for automakers as fleet sales help their bottom line and can offset declining retail demand for slow selling models such as the Chevrolet Malibu.
GM and Nissan would likely benefit the most from a rental car recovery as Reuters has previously reported fleet sales accounted for nearly 22% of GM sales in 2019 and 28% of Nissan sales. Rental sales are particularly important to Nissan as 93% of fleet sales in 2019 went to rental car companies as opposed to half from GM.
