Analysis: What Rental Companies' Woes Mean for Auto Industry

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May 26, 2020—The nation's rental car companies are struggling, as noted in a CNN Business report, and that could severely impact the already struggling auto industry as a whole.

During normal times, rental car companies account for no less than 10 percent of US new car sales, equaling roughly 1.8 million cars purchased last year. But, of course, COVID-19 has thrown a wrench into that in 2020.

Rental car companies usually get nearly 66 percent of their revenue from airport locations, and, with flying down 94 percent this Spring, there are fewer people renting cars. And, much of the non-airport business for rental cars comes from customers whose cars were in collisions, of course, with insurers footing much of the rental bill.

But, with miles driven being down, accidents are also down.

Hertz filed Chapter 11 bankruptcy late Friday night. Meanwhile, Avis Budget is in better financial shape, but is losing money, according to CNN, and said in March that it cut its new car purchase plan for the rest of the year by 80 percent.

New car sales are expected to be hurt in multiple ways in the months ahead, the report added. And that's obviously bad news for automakers, who are already struggling with problems bringing production back online after shutting U.S. factories for nearly two months.

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