Earlier this month, we reported that Hertz, one of the biggest rental car companies in the world, was in dire shape and could file for bankruptcy. At the time, the company was saved after being given an extension on their pending payments until May 22. However, it seems the rental car company was not able to pay its creditors or draw up a new strategy in times of COVID-19. As a result, Hertz has now officially filed for bankruptcy.
“The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company's revenue and future bookings. Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending, and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today's action,” the company said in a statement.
Despite filing for bankruptcy protection in the US, it doesn’t mean Hertz will just close up shop. All Hertz businesses and subsidiaries will continue to stay open to serve customers. International operations such as those in Europe, Australia, and other franchised locations are not affected as well. In fact, they say that “customers can count on the same high level of service and reliability” even in these times.
With Hertz filing for bankruptcy, it seems like a bad sign for other smaller companies in the car rental industry. The majority of companies in the car rental industry depend on airports and passenger travel in general. However, as most countries are still not allowing international flights or travel due to the COVID-19 pandemic, no one is renting cars. Furthermore, it might be a while before international or even domestic flights return to normal.
The only good news for car rental companies is that one of their biggest competitors in the industry, ride-hailing apps, are in the same situation. Once things resume back to the new normal, people might opt to choose to rent cars once more as opposed to ride-sharing.