Undoubtedly, the leasing industry will suffer significantly from the economic recession caused by measures to combat the Coronavirus. The Wall Street Journal announced last Friday, May 22, 2020, that the world’s oldest car rental and leasing company and one of the largest in the United States, Hertz, has filed for bankruptcy.
In March 2020, Hertz laid off 25% of its employees in the United States or 16,000 people. On May 18, 2020, a shift in top management occurred at Hertz Global Holdings, with Paul Stone taking over the CEO seat from Kathryn V. Marinello. The turbulence in the company suggested difficulties.
At the same time, the pandemic was more of a catalyst for processes that began in the past. In recent years, Hertz has begun to lose the battle with competition from the recently emerging new segment of “shared vehicles” and companies such as Uber and Lift. The truth is that perhaps Hertz also slightly underestimated the danger of the flexible new services that won customers at their expense.
At the time of bankruptcy, the company was burdened with about $ 19 billion of debt, while at the same time losing money over the past four years. The loss for 2019 alone amounts to USD 58 million! In recent months, measures related to efforts to limit the spread of Covid-19 have led to massive restrictions on tourism and air travel, and hence the use of car rental services. As a result, much of the company’s huge fleet is parked… or, as Hertz’s former CEO Kathryn Marinello was quoted in Forbes:
The bankruptcy of Hertz will affect many other sectors and systems. In addition to realistic expectations for another 40,000 unemployed employees in the United States, General Motors, the company that until recently provided Hertz’s fleet, will also be hit hard. Last but not least is the expectation of a collapse in the prices of used cars in the United States, where the 700,000 car fleet of Hertz will have to be remarketed.
During the insolvency proceedings, Hertz may be restructured and reopened… or sold. Until then, Hertz’s large franchise network will continue to operate as before. This includes its representation in Bulgaria – Autotechnika Ltd.
