Hertz Rental Cars filed for bankruptcy Friday. What is the one asset it has that creditors want to see it sell? It’s a stretch but we think you’ll get it. Ready? It’s their fleet of rental cars. Creditors want Hertz to flip their cars and say bye-bye. And they’re not the only rental car company in trouble. No one is renting cars because no one is traveling much. Air travel is down 94% for April and May. Besides being set up to rent cars, rental companies are also set up to sell cars. As the age of their fleets increases they want to sell them and purchase new models. Except now they’re just selling. That puts those in the market for slightly used cars in a great position. Do you want the cheapest price for used cars? Check the rental car websites for the best deals now.
Avis and also Enterprise are in the same situation
Hertz not only rents cars under its own banner but also through Dollar and Thrifty brands. But it is not the only one tanking. Avis and also Enterprise are in the same situation, though not financially. They appear to be able to weather the CORVID-19 pandemic lockdown. Still, they have more than a million vehicles they don’t need.
Driving around Motor Biscuit’s home digs of Los Angeles you can see them. Dodger Stadium and also Angel Stadium in Anaheim are packed with cars in their lots. But these aren’t fans watching a game. There are no games. These are rental cars with no purpose.
So what is to become of all of these excess rental cars? They aren’t appreciating. As each day goes by they lose a bit of value. So with the rental companies not needing them and their value dipping by the hour there’s only one thing to do: sell them.
It’s a perfect storm of hyper-depreciated prices on vehicles
The pandemic lockdowns are not only affecting the rental companies but also the car auction houses. They are not auctioning cars because of distancing restrictions. So not only are rental companies piling up unwanted cars but auction houses are too. It’s a perfect storm of hyper-depreciated prices on vehicles a year or two old.
With all of this swirling around what do you think happens to new car sales? These low mileage practically new vehicles present an alternative to buying a new car. That wouldn’t be terribly bad in a normal market. But besides all of the bad, that is hitting markets and businesses it also means the economy has tanked. So there are a lot fewer buyers looking for cars.
Trading in a leased car now might surprise you, and not in a good way. If you are in the market for a new car and your trade-in is worth a lot less it can increase the cost of leasing a new car.
The glut of inventory makes it a buyer’s market like we’ve never seen
With all of this crashing together it means that used car prices are going to be incredibly low. We don’t even know how it will affect new car prices but we can see the bulging inventory or used cars. Once they start hitting the auctions and rental car websites the glut of inventory makes it a buyer’s market like we’ve never seen.
So, the bottom line is to start scouring rental car websites for their rentals offered for sale. Every rental company has a portion of their site reserved for car sales. If you compare prices of those rentals offered versus similar vehicles on sites like Cargurus and Craigslist you’ll see some incredibly priced one- and two-year-old vehicles.
This is a once in a lifetime opportunity if you’ve got the inclination to see yourself in a slightly used vehicle.