Hertz Rental Cars going out of business ! Bankrupt ?!

I just heard about this and surely I am late to the party. A bit shocking to see this happen to be honest, as Hertz has been in the game a long time.

The used car market is about to be flooded with Hertz former rental fleet of 700K vehicles. Many of which are on sale now for what seem like pretty good prices.
If I had the need and the bread I might consider one for purchase. Personally I’d be a little leery about buying a former rental vehicle because I know how some drivers treat these poor machines, but they cant be all bad, no not even close.

Some of the reports blame COVID-19 as the culprit for the demise of Hertz. You would think a company as established as Hertz didn’t live on the ragged edge of bankruptcy at all times, pushed over the brink at the slightest hiccup (COVID not exactly a slight hiccup I know, but still you get the idea). Seems to be the back story of many a large business lately…one bump in the road and its total chaos…seems strange to me, but I’m no financial wizard or business man to say the least.

What do you people think about this stuff?

The world headquarters for Hertz is in my back yard. Their cars are sitting stationary filling up the local hockey arena sponsored by Hertz. No money is coming in rentals, bills are still coming in. The math gets ugly pretty quickly. Hertz, like any other company is not sitting on a pile of cash. They rely on cash flow and bank notes to keep the gears turning. And the just built this new headquarters a couple of years ago.

Just in the last few years we’ve seen a number of 100+ year old companies file for bankruptcy. Sears, GM, JCPenney to name but 3.

Chaper 11 doesn’t mean they are gone.

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Hertz is only the first of the many bankruptcies we’ll be seeing in the travel and leisure industry. perhaps another car rental company, at least one cruise line, some hotels, and maybe others.

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Do you feel that these large businesses are financially mismanaged. As in too much profit going to CEO’s over too long a period of time? Shouldn’t profits year after year sort of go into the company coffers to bolster the ship so to speak? Like I said I am nooo businessman, but it seems like these big businesses should have more strength to them…to weather most any financial storm, within reason…I would never have thought that a month or three would spell the death knell for such large entities.

I guess it would make more sense to me if I paid any kind of attention in any of the accounting or financial classes that my body occupied at some point in the timeline of my life. Instead of talking to girls and or drifting off to some tropical paradise on an imaginary surf trip with the Hawaiian Tropic Bikini Team as the support crew. Wait what was I talking about again?

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Enterprise is headquartered in Clayton MO which is part of the St. Louis metro area. From what I’ve read, both Enterprise and Avis are in better shape than Hertz but like ALL travel industry companies are hurting. Enterprise has already laid off and furloughed thousands of employees with more to come, including many, both hourly workers and salaried executives, at headquarters.

As to Hertz, I believe they have filed for reorganization bankruptcy rather than liquidation. But either way a lot of assets are apt to be sold off to downsize expenses and raise operating cash.

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I bought a 2 year old ex-rental from the Hertz used car lot about 20 years ago. The car was in good shape, had about 36K, and the sale itself was very pleasant. The salesman didn’t try to push me, the price was firm but fair, and he looked like a regular guy, not some insecure guy who looks like he’s trying too hard to be on the cover of GQ magazine

It was a pretty good car, and we hung onto it for several years.

I hear what you’re saying . . . but I don’t think anybody expects Sears and JC Penny to be around much longer. As far as those 2 go, the corona virus was just the final nail in the coffin :coffin:

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Don’t confuse these different companies situations. Filing Chapter 11 bankruptcy stops creditors from dissolving the company.and liquidating the assets in their own. It allows the bankrupt company to restructure the loans under the oversight of the court. That means that Hertz and their creditors agree to how and when the original loans are paid off. If all goes well, Hertz will eventually emerge from bankruptcy without continuing troubles.

Sears declared declared Chapter 11, but has been in the process of liquidating their assets. They sold Kenmore and Craftsman, and seem to be moving out of the brick and mortar business. Maybe they will remain in the on line market. The investment banker that owns Sears thinks it’s worth more dismantled than as a continuing business.

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That’s a good one :laughing:

Those idiots could have BEEN Amazon, if they’d been smart back in the day

Sears is like an 89-year old obese diabetic person with high blood pressure, several previous heart attacks and strokes who’s been put on the ventilator

I don’t think anything can save them now :coffin:

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I said the current owner is selling the company off little by little. Isn’t that the same as saying it’s going out of business? I just described how it’s going down. 20 years ago Sears may have been mismanaged, but that isn’t the case today. The owner is succeeding at all or most of his goals.

If Sears sold merchandise online at wholesale prices like Amazon nobody would visit the stores except to try on clothes, then go home to order them. Then the stores would look more like Goodwill, used clothes. Two different business models, one is becoming obsolete and the real estate is worth more than the revenue.

My employer went though Chapter 11 5yrs ago so it doesn’t mean that the company will soon go out of business but nothing’s for sure. Hertz has been teetering on the edge for some time and hopefully can continue on in some form.

Several friends have former Enterprise cars and have had no problems with them.

My G6 was a rental return that the dealer picked up. Current model year, 30K, cream puff. Haven’t hardly had a problem at all and I’m at 150K now wondering what to do for a new car.

No one is traveling hardly unless they have to, so yeah who needs an airline with ten flights a day or a rental car or a hotel or a restaurant. People are scared to death to even talk to each other unless it’s zoom. So it’ll be a tough time. Hertz was always a little higher priced from all the others and a lot of companies have gotten into the act. Then there is computer price search like for hotels that puts a premium on being the cheapest.

I don’t know enough about it but I suspect they have leased these cars. So they have regular lease payments and all the other overhead like sales facilities and have to keep their cars out on the road to churn a profit. Even if they don’t lease, they didn’t pay cash for the cars so interest payments. I guess this isn’t necessarily because of the shutdowns but more because of the virus scare. Prolly the media isn’t helping people feel any better. I’ll be honest though, it’ll be a while before I’ll get on a plane again.

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@Bing you just made me think about what it would be like to keep making payments on at least 700K vehicles…not to mention buildings and other business related items…when business has basically dried up overnight and on purpose.

Probably doesn’t take long to see the writing on the wall, no matter what kind of money you have saved. I guess business isn’t conducted on the money you have but the money you project to be able to make. Hey see… I must have paid attention on at least one day of class, no idea where that just came from, but it sounds right, so there you have it. My financial advice has now concluded.

Yikes…

The mention of Sears has me recalling my copy of the 1909 (or 1897) Sears catalogue…trying to choose which straight razor or pre-fab home to buy. The prices between the basic and the most extravagant, literally delineated by pennies… Pennies seemed to be like dollars in that catalogue, literally. Then there were saddles, soaps, horse grooming stuff, Opium, pipes, brooms, electric devices…miracle products, elixirs, man…you name it and many things you couldn’t pronounce also. Like @db4690 said…Sears literally WAS Amazon. Funny how big businesses become so large to be able to afford mismanagement, overspending and complacency for decades…until suddenly, they can no longer pull it off. Detroit comes to mind here also.

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+1
A Chapter 11 bankruptcy filing does not necessarily mean that a company is going out of business.
On the other hand, a Chapter 7 bankruptcy filing does lead to a cessation of business.

At this point, Hertz has filed for Chapter 11, and that essentially means that their suppliers will only be paid a fraction of what they are owed, in order for Hertz to “reorganize”. It is entirely possible that Hertz will file for Chapter 7 at a later date, but at this point, they are merely attempting to “reorganize”.


:+1:
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JC Penny was in the same position. Huge catalog sent out 2 times a year. Both companies totally missed the new online retail wave. Walmart was behind but is catching up. Their website ordering process is inferior to Amazon’s.

The management takes the blame, for sure, but consider this. Visionary CEOs that create this new order in business, often aren’t the ones to maintain and grow the business. Think Bill Gates, Steve Jobs, Mark Zuckerberg, Elon Musk

It takes a different kind of CEO to manage after the explosive growth, with no profits, to set the business on a path to steady growth. Often, a CEO that isn’t nearly as creative as the founder. Now think 50 years ahead. Things have radically changed. If a company is still doing things much the same way, they are probably doing it wrong.

Those that don’t evolve, die off… Sears, JCPenny, Wards. Others become almost unrecognizable from their original business… IBM, NCR, GE

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I’ll add one more thought.

The pandemic is a “Black Swan” event no one could have predicted would hit exactly when it did. 9-11 was the same thing. Businesses SHOULD be creating contingency plans for these events but you can’t always prepare as you’d want.

My wife worked for Marriott’s senior living division in 2001. It was assisted living done Marriott style. When 9-11 hit, the hotel business went into the tank. Losing money hand over fist. Marriott sold the entire assisted living division to save the hotel business. Their core business. It was a hard decision to make but it saved Marriott until the hotel business came back.

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A couple of months ago, I ordered something from Walmart.com, and its delivery was very much delayed. I would check their website every few days to see if there was an update on the delivery date, and initially that worked–until it didn’t. It got to the point where the screen showing updated delivery info would appear for about one second, and would then disappear. There was never enough time to actually read the details that were on that screen. This happened repeatedly, for at least a week.

Finally, my merchandise arrived, and it proved to be defective. Because it had been sold by a third-party vendor, rather than by Walmart, I emailed that vendor repeatedly regarding a refund, only to get no response.

I was finally able to get in touch with Walmart.com’s customer service folks, and they proved to be very good… once you got past being on hold for 45 minutes. :grimacing:

I did get my refund, but the entire process was much more onerous than what I have experienced with Amazon.

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PARTICULARLY General Motors . . . ahem :smirk:

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+1

When the subject of “the poor” comes up, some people will automatically attribute their dire financial straits to some sort of moral failure. Well, if that is true, then certainly it would be valid to state that corporate CEOs and Boards of Directors must have major moral failings if they can’t figure out–over a period of years or decades–how to revise their business plans in order to keep their companies from going out of business.

Hmmmm…
:thinking:

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Many companies miss tidal changes in their business because they are successful at what they do. Why should they change if what they do works? Eventually, they are way behind and may never catch up. Look at Toyota, a successful car company. Their hybrids have been so successful that they are behind in the electric vehicle market. GM is ahead in the electric car market because they skipped the high power hybrid market. Their one reasonable entry, the Volt, was mostly a stepping stone to electrics according to them. Toyota is big and rich. They still have time to catch up, but at what cost? Electrics might turn off the hybrid crowd and they wind down hybrid production and ramp up electrics. It’s not an easy decision when and how to transition to a new way of doing business. Hybrids aren’t anywhere near done and there’s plenty of room for electric vehicle manufacturers. It isn’t clear how long that will last.

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