Following speculation last week that car rental giant Hertz was considering bankruptcy, the other shoe dropped over the weekend. It’s yet another event in a string of unprecedented happenings this year that has thrown the car sales market into chaos.
With travel and car rentals at a virtual standstill, Hertz has been struggling financially. It finally reached its breaking point, filing for Chapter 11 bankruptcy on the Friday before Memorial Day weekend. We’ll point out that Chapter 11 allows for Hertz to formulate a plan to repay it debts, rather than perform a complete liquidation of assets. Even still, that probably means that hundreds of thousands us lightly used cars are about to flood the marketplace.
Over 750,000 Cars
According to Automotive News, Hertz had about $1 billion in cash to keep its operations going. That included brands like Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen too. However, it appears that tidy sum won’t be enough. According to their bankruptcy filings, Hertz has about $24.4 billion in debts.
Those debts can technically be covered by their reported $25.8 billion in assets. However, that would require the liquidation of their entire fleet. Hertz maintains roughly 565,000 vehicles in the U.S. alone, with another 200,000 in international markets. They keep each car somewhere between 12 and 18 months before selling them off or returning them to dealers at the end of a lease.
Will There Be Deals?
The short answer is: maybe. Yeah, we know that’s not very definitive. However, used car prices have dropped dramatically over the last couple months. Leases are still ending, but few people are shopping for a new ride. Plus car manufacturers are building new cars again, creating much more supply than there is demand for any car, new or used. Then add the fact that Hertz already sold 41,000 used cars back in March to try and earn some cash.
Some estimates put used car prices down over 33% in April. If you are in the market for a gently used vehicle, this bursting bubble could score you a major deal. Just last week Hertz put a bunch of yellow Corvette Z06s for sale, and the prices were more than attractive. Jalopnik points out that there are plenty of interesting buys on the Hertz Car Sales website, including a 2020 BMW 740i with only 8,500 miles on it for just over $50,000.
What About “Regular” Cars
Okay, so not everyone wants a new ‘Vette or Beamer. Hertz rented plenty of everyday cars too. There are plenty of reliable sedans and ever-popular SUVs that are also about to hit the market. Hertz stocked their fleet with a diverse range of brands, including GM, Fiat-Chrysler, Ford, Kia, Toyota, Nissan, and Hyundai. So if you’re looking for an Escape or a Tahoe, or just a Forte or Altima, keep your eyes peeled. You just might discover an insanely good deal.
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