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Hertz files for bankruptcy protection
- Simulacra 6y agoThat's a shame. I still don't quite understand how they racked up so much debt. I get that they took on tons of compacts when the nation wanted midsize suv's, but it seems like somewhere an alarm bell should have been ringing a while ago...
- xnx 6y agoThe article does a pretty good job of laying out the many mistakes that compounded their problems.
- tonyedgecombe 6y agoThey were bought from Ford by private equity which loaded them with extra debt to finance a dividend. They offloaded it via an IPO a year later.
- rags2riches 6y agoIsn't dividends supposed to be payed from equity? "Loading with debt" will not increase the equity available for dividends.
- tonyedgecombe 6y agoYes but you might need that cash on hand for running the business.
- Metacelsus 6y agoI wonder if this will affect the Hertz graduate research fellowships. I'd guess probably not.
- kkylin 6y agoDon't think the Hertz Foundation has much direct ties to the company (though not 100% sure), despite both being started by the same person.
- et2o 6y agoThe compact car thing is interesting. It seems like business travelers still rent compact cars or medium sized sedans 90% of the time in my experience.
- gwbas1c 6y agoAs a business traveler, I only rented a compact car from Hertz and it was awful. I always go for medium sized now.
- HeavenFox 6y agoRental car companies play game with the categories. Just a couple of months ago they tried to convince me a Camry is a full-size car and gave me a Corolla for my mid-size reservation.
- booi 6y agoCompared to the compacts I’ve rented... a Corolla is pretty mid-size
- bigiain 6y agoCompared to a 2000-ish model Corolla, a 2020-ish Corolla is pretty much mid sized.
- moltar 6y agoI’d agree with their judgement. But I think it’s very subjective. Different parts of the world have different averages. To me the Toyota range is like this: - Yaris: compact - Corolla: mid sized - Camry: full size
- zaksoup 6y agoYeah, I'm curious if a Camry is mid-sized what a full size is. Taurus? Those things are absolutely massive. My Ford Focus feels big, honestly, but maybe that's because I live in a relatively urban area with pretty tight street parking?
- purplezooey 6y agoMy question is, how come these claims of a "decimated used car market" never seem to make it over to actual customers. I'd sure as shit buy a car at 40-50% less than it was 3 months ago.
- cepth 6y agoThe margins for used cars aren’t high enough to support that kind of discount (https://jalopnik.com/how-to-negotiate-for-a-used-car-5570813 https://jalopnik.com/how-to-negotiate-for-a-used-car-5570813 and https://www.autonews.com/article/20180428/RETAIL04/180439997/losing-money-on-used-cars-yes-and-no https://www.autonews.com/article/20180428/RETAIL04/180439997...). Think of it this way: there isn’t nearly enough demand right now, regardless of whether you (the dealer) discount your inventory or not. I.e., you will not move enough cars to pay for fixed costs like the mortgage on your building, financing the inventory on your lot, etc. The Fed has done various studies on household savings account balances and/or net worth (https://www.valuepenguin.com/banking/average-checking-account-balance https://www.valuepenguin.com/banking/average-checking-accoun... and https://abcnews.go.com/US/10-americans-struggle-cover-400-emergency-expense-federal/story?id=63253846 https://abcnews.go.com/US/10-americans-struggle-cover-400-em...). The vast majority of Americans would have to finance a car purchase, even for something like a 10-year old used car. Yes interest rates are low right now, but does it make sense for a consumer to buy a depreciating asset and increase their monthly interest costs at this point in time? To the car dealer (or rental operation like Hertz), the question is does it make sense to have a fire sale on your inventory now (at prices that will almost certainly lead to an accounting loss), or do you take your chances in bankruptcy court? If you believe that in the next year or two that the market for used cars recovers somewhat, you can sell those assets off during bankruptcy proceedings to pay off creditors etc. There’s a strong case that taking this approach will leave the company as a whole better off in 3-5 years, though equity holders will certainly be taking a huge hit.
- icelancer 6y agoPretty much this. Depreciation is outpaced by the slashing of the margin you'd have to incur to sell today in any sort of reasonable quantity (especially if it is a cash transaction).
- papercruncher 6y agoI have never, ever, had a good experience at a Hertz (or most of the other majors to begin with). The process of renting a car is one dark pattern after the other, from the website, to the real-life rental location, even the cars themselves. Every experience was at best frustrating, typically rage inducing. I won't miss them.
- icelancer 6y agoThat's odd. I have good experiences with them. Walk into the place, talk to no one, get in a car, drive to the window, take off.
- chrisseaton 6y agoWhenever I try to rent a car from somewhere like Hertz I'm presented with a baffling array of choices for waivers and insurance. I have absolutely no idea what I'm supposed to buy and how the insurance works. They want me to pick and sign right there under pressure and with no time to read the agreement. I'm almost always left with no real understanding of what happens if I have a crash and pretty worried that I may be liable for more than I'm worth. It's comical they way they wave those barely readable sheets of paper around randomly circling things and putting crosses in places.
- icelancer 6y agoYeah, you gotta be a Gold member (or equivalent at other places) to get around this BS and do it all online / before you show up. I agree that the stock experience is miserable. Fortunately through AMEX it's free, same with Delta if you're any sort of status, etc etc. It's a method of gatekeeping.
- tjansen 6y agoSame here. When you are a Gold member, you they can't even try to upsell you anything. You just show your license at the exit and then drive away.
- mister_hn 6y ago
- bouncycastle 6y agoThis is an opportunity for Tesla to buy out the Hertz brand, it would make a perfect complement!
- asaph 6y agoI disagree. Tesla is a luxury brand. Hertz is not.
- rainyMammoth 6y agoI think you missed the joke (And also, Tesla a luxury brand? Seriously?)
- hestefisk 6y agoI think outside of the US it’s considered very luxurious.
- rainyMammoth 6y agoModel S and Model X are definitely higher end cars. Once you remove the hype factor, Model 3 is comparable to Honda or Volkswagen.
- tonyedgecombe 6y agoIn the UK a Model 3 is priced like a BMW. A typical Honda or Volkswagen is a lot cheaper.
- rainyMammoth 6y agoif I sell you a Volkswagen for the price of a BMW, does it make it luxurious? Model3 is expensive because it is hype and electrical. EDIT: your reply is actually making my point (cannot reply anymore so replying here). All the other EV Cars such as the Bolt that nobody would consider luxurious are around the same price.
- namdnay 6y agoSo they laid off or furloughed 10000 staff, but cancelled pay cuts for management? Well, I know one rental company I’ll never buy from...
- fxtentacle 6y agoI also thought this is as damaging a quote as it gets "The company had cut pay for senior leaders in March, too, but reversed that decision recently." So they'll be flying into bankruptcy with a golden parachute.
- londons_explore 6y agoIf you know your company is about to go bankrupt in a few months, and they tell you your salary is being halved, and your share options are now worthless, you'd leave right away too. Management staying on to do a more careful windup of the business and protect assets from theft or other losses is probably money well spent.
- namdnay 6y agoThe fact that it might be a rational business decision doesn’t mean that it isn’t also an indicator of a diseased company culture. I can’t imagine my employer announcing that 10k jobs will be cut but senior management keeps full pay...
- chrisseaton 6y ago> an indicator of a diseased company culture Well yeah the company is as diseased as it could be - it's dying. Why would they care what you or their employees think about their culture? The customers are gone and they're firing the employees. They're protecting as much of the investment as is left at this stage.
- namdnay 6y agoI meant the culture is diseased. You could have a company with a healthy culture that ends up in a very bad situation and deals with it in a more ethical way. See Airbnb. Can you imagine accepting to fire half your staff and still getting full pay?
- monkeydust 6y agoRenting out your own car exists in the UK, there are a few platforms that do that. I wonder if that done right is the future, more decentralised form of car rental. After all there are a lot of cars parked on the street idle for long periods.
- dazc 6y agoCompare what the average Joe pays for a car and what the likes of Enterprise pay. It may become a niche but could never scale beyond that.
- tjansen 6y agoEven though Elon Musk seems to be believe people would do that, I doubt that. Who would want to clean out their car every time they leave it? Then inspect it for damages when they need it again? Always be forced to plan ahead when they need the car, because otherwise someone else may have rented it? It's even less convenient that just using a "floating" car sharing service.