Rental-car companies struggling to survive the coronavirus pandemic’s catastrophic blow to their business have been working with automakers to call off purchases, in some cases even redirecting vehicles in transit to their now largely neglected parking lots.
General Motors Co. is taking back cars it agreed to sell that were on their way to Hertz Global Holdings Inc., Avis Budget Group Inc. and closely held Enterprise Holdings Inc., a spokesman said. Hyundai Motor Co. also confirmed it has redirected some vehicles to its retailers that it was planning to produce for fleet customers.
The effort by the automakers to help the companies shrink their fleets captures just how dire the rental business is amid shutdown orders that have clobbered the travel industry. Hertz’s lenders granted an eleventh-hour reprieve from a potential bankruptcy on Tuesday, while Avis sold $500 million of high-interest junk bonds to weather what it expects to be back-to-back months of revenue plummeting 80%.
Carmakers — some of which have struggled to find space for an unprecedented glut of cars at U.S. ports — will not be able to count on the rental-car companies to help buoy sales for the foreseeable future. Deliveries to all fleet customers are about 20% of their business in the U.S., and the vast majority of those go to the rental channel.
Hertz, Avis and Enterprise have cancelled all orders of GM vehicles for May, June and into July, according to a person familiar with its operations who asked not to be identified because the information is private. Hertz said in a filing Tuesday that it does not expect to acquire new vehicles for the remainder of this year.
Read more via Bloomberg
