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Hertz files for bankruptcy protection


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 I posted a few days ago , a great Wolf report article, including the possibility of hertz bankruptcy on the the long running hpc thread

'boe-investigates-terrifying-rise-in-borrowing-to-fund-new-car-purchases'

https://www.housepricecrash.co.uk/forum/index.php?/topic/229784-boe-investigates-terrifying-rise-in-borrowing-to-fund-new-car-purchases/page/56/#comments

The coming vehicle rental co bankruptcies & used car market flood ..

Used-Vehicle Market Starts to Unfreeze, “Pent-up Supply” Looms

https://wolfstreet.com/2020/05/20/used-vehicle-market-begins-to-unfreeze-pent-up-supply-looms/

Quote

The numbers are huge. US rental car companies have been buying around 2 million new vehicles per year (1.9 million in 2019, according to J.D. Power). They keep them for longer than a year on average, so there are about 2.5 million to 3 million rental cars available to drive on average, with more vehicles in various stages of entering the fleets or being removed from the fleets, this being a constant massive flow of cars, normally. But the drain has gotten plugged up.

The drain being plugged up is a big issue because rental-car use has collapsed. Rental car companies need to shrink their fleets to be inline with demand. Cancelling new orders was the first step, and they already did that. J.D. Power estimates that rental car companies will purchase 1.05 million vehicles in 2020, down from 1.9 million in 2019. Now comes the hard part: selling a big portion of the fleet they have but don’t need.

Hertz is on the verge of bankruptcy. At the end of April, it disclosed it had missed a large amount of lease payments on its rental cars. Since then, it has entered into forbearance and waiver agreements with these lenders that give it until May 22 to come up with the money and a plan. Its cars, now parked at various parking lots around the country, are collateral for this debt.

At the end of 2019, Hertz’s US rental fleet was about 567,000 vehicles. Lenders don’t want to end up with these cars either, especially not in this environment where getting out from under them would be tough and painful, and they’re motivated to work out a deal that would keep those cars off their parking lots.

The entire industry hopes that a Hertz bankruptcy can be averted and that those cars don’t suddenly get liquidated by its lenders.

In the second half of March and in April, the used wholesale market essentially froze. The volume of vehicles going through the auction plunged, as many auctions were shut down and dealers weren’t buying. Prices took an all-time record hit. According to J.D. Power, weekly auction volume collapsed from the 110,000-vehicle range before the crisis to a low 18,000 in the first week of April.

 

 

Edited by Saving For a Space Ship
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1 hour ago, Ghostly said:

$19bn of debt. Absolutely insane.

Exactly I can understand airlines getting billions into debt - planes aren’t cheap - but how does a car hire firm get 19bn USD into debt? They lease cars, charge high insurance to people renting cars - you can pay more for two weeks for full super cover than your personal annual car insurance - so their risk is limited?

Fair things have been tough since late March but 19 billion didn’t get racked up that quick.

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18 minutes ago, MARTINX9 said:

Exactly I can understand airlines getting billions into debt - planes aren’t cheap - but how does a car hire firm get 19bn USD into debt? They lease cars, charge high insurance to people renting cars - you can pay more for two weeks for full super cover than your personal annual car insurance - so their risk is limited?

Fair things have been tough since late March but 19 billion didn’t get racked up that quick.

over 100 years old apparently.

Another name injected with debt and mortgaged to the hilt.

Anyone seen the film the founder? I quite enjoyed it about the guy who grew McDonalds.

There is a scene where the finance guy tells him something like you are not a food business you are a property business with restaurants or words to that effect.

Many of these large companies are debt pyramid schemes with a company attached.

Edited by Fromage Frais
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1 hour ago, Fromage Frais said:

over 100 years old apparently.

Another name injected with debt and mortgaged to the hilt.

Anyone seen the film the founder? I quite enjoyed it about the guy who grew McDonalds.

There is a scene where the finance guy tells him something like you are not a food business you are a property business with restaurants or words to that effect.

Many of these large companies are debt pyramid schemes with a company attached.

Watched that film - the McDonald brothers essentially had their ideas and name stolen from them by Roy Kroc who then as you say turned it into a global real estate business selling mass produced cheap food. They accepted - via a handshake - a gentleman's agreement to get 1% of the royalties but never signed a contract meaning their families now miss out on 100m USD a year that was morally theirs.

https://en.wikipedia.org/wiki/The_Founder

I doubt that Walter L Jacobs who founded the company in 1918 with 12 Ford vehicles - before selling it to John Hertz in 1923 would be too impressed. They also hire cars under the brand names Thrifty and Dollar - hardly thrify with those dollars in reality!

My dad would only hire cars from Hertz - so I sat in plenty of their cars over the years!

Edited by MARTINX9
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3 hours ago, Fromage Frais said:

over 100 years old apparently.

Another name injected with debt and mortgaged to the hilt.

No doubt the vultures  will be circling.. if they haven't already.

 

Edited by Warlord
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On 23/05/2020 at 11:42, MARTINX9 said:

Exactly I can understand airlines getting billions into debt - planes aren’t cheap - but how does a car hire firm get 19bn USD into debt? They lease cars, charge high insurance to people renting cars - you can pay more for two weeks for full super cover than your personal annual car insurance - so their risk is limited?

Fair things have been tough since late March but 19 billion didn’t get racked up that quick.

Who is left holding the bill? The banks?

That’s going to Hertz!

 

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21 hours ago, Warlord said:

No doubt the vultures  will be circling.. if they haven't already.

 

Someone really needs to get on top of these hedge funds.

Take all the misappropriated assets (even if technically legal) and then strip them naked and whip them through the streets.

 

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4 minutes ago, Mikhail Liebenstein said:

Someone really needs to get on top of these hedge funds.

Take all the misappropriated assets (even if technically legal) and then strip them naked and whip them through the streets.

 

The video was very good. Fox is right wing so to see one of their main hosts shun this kind of capitalism is very encouraging. After all it gives it a bad name. We can do without it.

 

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9 minutes ago, Mikhail Liebenstein said:

Someone really needs to get on top of these hedge funds.

Take all the misappropriated assets (even if technically legal) and then strip them naked and whip them through the streets.

 

The shadow banking system + the tax havens + the vulture funds. How crony capitalism came to rule the world.

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  • 418 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • up 5%



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