Analysis: What Rental Companies' Woes Mean for Auto Industry

May 26, 2020
The nation's rental car companies are struggling, and that could severely impact the already struggling auto industry as a whole in the months ahead, due to factors like lessened miles driven.

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.

Sponsored Recommendations

Best Body Shop and the 360-Degree-Concept

Spanesi ‘360-Degree-Concept’ Enables Kansas Body Shop to Complete High-Quality Repairs

How Fender Bender Operator of the Year, Morrow Collision Center, Achieves Their Spot-On Measurements

Learn how Fender Bender Operator of the Year, Morrison Collision Center, equipped their new collision facility with “sleek and modern” equipment and tools from Spanesi Americas...

ADAS Applications: What They Are & What They Do

Learn how ADAS utilizes sensors such as radar, sonar, lidar and cameras to perceive the world around the vehicle, and either provide critical information to the driver or take...

Coach Works implements the Spanesi Touch system

Coach Works Uses Spanesi Equipment to Ensure a Safe and Proper Repair for Customers