5 ms·

The car rental industry is slowing going the way of Blockbuster. Maybe not in the next year or two, but it is an inevitability.

gruez 5y ago
What are they going to be replaced with? Car "sharing" companies? Are people going to miraculously not going to require car rentals (eg. for trips) anymore?
- rexreed 5y ago
  It certainly seems that way... in the long run. In the beginning, in 1997, Netflix was a company that sent DVDs by mail. Fast forward, they're an internet video-on-demand company. The writing was on the wall for Blockbuster way back in 1997 but it took over a decade for their model to go bust. The not-so-well known fact is that Blockbuster was already losing money and going bankrupt even before Netflix finished them off. Similarly, Hertz has declared bankruptcy and the other car rental companies are not far behind. Uber and Lyft are certainly not the cause of their demise in the same way that 1997-era Netflix couldn't be blamed for Blockbuster's demise. But the writing was on the wall, and the writing is certainly on the wall here. This comment thread on HN from 2008 is quite an interesting read if you see some of the comments denying Blockbuster's precarious position: https://news.ycombinator.com/item?id=280425 https://news.ycombinator.com/item?id=280425
  - brewdad 5y ago
    Hertz declared bankruptcy because a global pandemic shut down travel worldwide overnight and they were highly extended in credit that up to that moment made sense in a normally functioning society and low interest rates.
    - rexreed 5y ago
      When you're living life on the edge, every short-term problem can turn into a life-threatening disaster. If it wasn't the pandemic, it would be something else. The rental car industry is living paycheck to paycheck. Hertz (and Avis and Enterprise and Dollar Thrifty and ...) have endemic and structural problems. Indeed, read this article, which was originally written in 2012 and updated in 2018... before the pandemic: https://www.fool.com/investing/general/2012/07/13/surprising-facts-abut-the-rental-car-industry.aspx https://www.fool.com/investing/general/2012/07/13/surprising... "... this interferes with the ability to develop a moat around their products and/or services. And on a practical level, it impedes margins and profitability. Avis and Hertz, for instance, have been profitable in only one and two of the last five years, respectively."
- mantaraygun 5y ago
  They're being replaced by people taking fewer trips, and fewer people taking trips at all. By people taking road trips instead of plane/etc trips and having their own car at their destination, or by choosing to visit friends/family and being able to use that person's car. And then of course there is uber, to mop up the remainder.
- mschuster91 5y ago
  > Car "sharing" companies? Are people going to miraculously not going to require car rentals (eg. for trips) anymore? Indeed. Stuff like DriveNow (which is BMW's service) or public transport are eating up car rentals, and Uber plus videoconferences are eating up the "executive wants to drive from the airport to their destination" market... and anyway, the financial situation of Hertz and friends was dire even before corona hit, because they all have leased their cars for "cashflow/capex vs opex optimization" instead of outright buying them for cash. There will absolutely be specialists remaining - UHaul etc. for moving trucks, or stretch limo and camper rentals - but the days of point-of-sale rental companies are over.

gruez 5y ago

What are they going to be replaced with? Car "sharing" companies? Are people going to miraculously not going to require car rentals (eg. for trips) anymore?

rexreed 5y ago
It certainly seems that way... in the long run. In the beginning, in 1997, Netflix was a company that sent DVDs by mail. Fast forward, they're an internet video-on-demand company. The writing was on the wall for Blockbuster way back in 1997 but it took over a decade for their model to go bust. The not-so-well known fact is that Blockbuster was already losing money and going bankrupt even before Netflix finished them off. Similarly, Hertz has declared bankruptcy and the other car rental companies are not far behind. Uber and Lyft are certainly not the cause of their demise in the same way that 1997-era Netflix couldn't be blamed for Blockbuster's demise. But the writing was on the wall, and the writing is certainly on the wall here. This comment thread on HN from 2008 is quite an interesting read if you see some of the comments denying Blockbuster's precarious position: https://news.ycombinator.com/item?id=280425 https://news.ycombinator.com/item?id=280425
- brewdad 5y ago
  Hertz declared bankruptcy because a global pandemic shut down travel worldwide overnight and they were highly extended in credit that up to that moment made sense in a normally functioning society and low interest rates.
  - rexreed 5y ago
    When you're living life on the edge, every short-term problem can turn into a life-threatening disaster. If it wasn't the pandemic, it would be something else. The rental car industry is living paycheck to paycheck. Hertz (and Avis and Enterprise and Dollar Thrifty and ...) have endemic and structural problems. Indeed, read this article, which was originally written in 2012 and updated in 2018... before the pandemic: https://www.fool.com/investing/general/2012/07/13/surprising-facts-abut-the-rental-car-industry.aspx https://www.fool.com/investing/general/2012/07/13/surprising... "... this interferes with the ability to develop a moat around their products and/or services. And on a practical level, it impedes margins and profitability. Avis and Hertz, for instance, have been profitable in only one and two of the last five years, respectively."
mantaraygun 5y ago
They're being replaced by people taking fewer trips, and fewer people taking trips at all. By people taking road trips instead of plane/etc trips and having their own car at their destination, or by choosing to visit friends/family and being able to use that person's car. And then of course there is uber, to mop up the remainder.
mschuster91 5y ago
> Car "sharing" companies? Are people going to miraculously not going to require car rentals (eg. for trips) anymore? Indeed. Stuff like DriveNow (which is BMW's service) or public transport are eating up car rentals, and Uber plus videoconferences are eating up the "executive wants to drive from the airport to their destination" market... and anyway, the financial situation of Hertz and friends was dire even before corona hit, because they all have leased their cars for "cashflow/capex vs opex optimization" instead of outright buying them for cash. There will absolutely be specialists remaining - UHaul etc. for moving trucks, or stretch limo and camper rentals - but the days of point-of-sale rental companies are over.