Hertz Bankrupt, Should Have Taken the CDW

"someassemblyrequired" (someassemblyrequired) 05/22/2020 at 23:12 • Filed to: Baby it Hertz

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In least surprising news ever, Hertz filed for Chapter 11 after the markets closed today, citing an almost total collapse in demand.

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SBA Thanks You For All The Fish > someassemblyrequired 05/22/2020 at 23:22

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Beat me to it. I was just going to post about it too.

I’m not sure if this affects the price of a Shelby Mustang or Corvette in an ugly color, but I’m more worried about my Budget Rental Car reservation in June.

someassemblyrequired > SBA Thanks You For All The Fish 05/22/2020 at 23:24

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Got an email from IR, luckily I got out of that POS a long time ago. They’ll probably just jettison a bunch of cars/employees/airport agreements and continue. I think Icahn was playing both sides, and just bought up most of the debt and will come away with the company out of bankruptcy court.

You should be good for June, Avis/Budget is in better shape, but even if they file they will still continue operations, at least in a nominal way.

CB > someassemblyrequired 05/22/2020 at 23:35

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But why didn't they have an emergency fund like we're supposed to?

fintail > someassemblyrequired 05/22/2020 at 23:37

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I wonder if they’ll have a fleet of 4 year old cars with 120K miles now. Doesn’t sound appealing.

I generally have had good luck with Sixt, but I also have PC status with Hertz, and around 5000 Hertz points left.  I wonder what will become of all that.

smobgirl > CB 05/22/2020 at 23:55

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I am so sick of hearing about emergency funds. The worst was the last time I was apartment shopping and realized that the folks who qualified for the income restricted properties had to pay much more than I was willing to, despite the income  maxing out at just a smidgen less than my salary. (This was a bit ago).

ranwhenparked > CB 05/23/2020 at 00:02

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They do have $1 billion in cash on hand, which is about 6 months of expenses for them, at a current cash burn rate of $502 million per quarter .

However, the entirety of the travel and travel-related industries worldwide have been almost totally shutdown, so there’s no revenue coming in to replenish those funds as they deplete, and there has been talk that some travel restrictions will remain in place until a vaccine is in mass production, which means the industry won’t rebound for anywhere from 2 years to never.

someassemblyrequired > fintail 05/23/2020 at 00:10

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yeah Hertz fleet quality has gotten super dodgy at times. If I wanted a 100K mile rental car, I’d buy a beater off CL.

Apparently the points are still good going forward, but I’m not seeing the demand coming back anytime soon.

WilliamsSW > someassemblyrequired 05/23/2020 at 00:17

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Icahn is generally not someone you want to be investing alongside of. 

ranwhenparked > someassemblyrequired 05/23/2020 at 00:23

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Their management seems dysfunctional. A friend of mine was a branch manager for them for about a year in Florida. He had contracts with a number of big car dealer groups and body shops to provide their courtesy cars, but then kept getting his inventory reallocated to the airport on short notice , so they often couldn’t provide cars when required, and they never allowed enough staff to properly run the branch, so returned cars piled up outside with no one to wash or refuel them, and there was a big fire ant problem in the holding lot that they wouldn’t pay to handle.

jminer > someassemblyrequired 05/23/2020 at 00:36

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I’ve always liked hertz, they’re my favorite to rent from. I hope they emerge from the bankruptcy a similar company.

fintail > someassemblyrequired 05/23/2020 at 00:40

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I’ve had fair luck my past few Hertz rentals - only one miled up car - but I am the renter who will sweet talk the agent into seeing what else is available, and will wait around for new cars to come out.   

From what I know, Hertz discontinued the ability to transfer points to air miles, so I might be stuck with them.  

Chariotoflove > someassemblyrequired 05/23/2020 at 01:14

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I’ve almost always  gotten what I needed from Hertz, a car that runs well, doesn’t smell bad, and does the job. A couple times in the 90s, I had problems with them not having a car ready with hand controls when I got there. Those times were on local offices dropping the ball, and they disappeared eventually. The actual people on the ground usually ad my back, driving the car to the terminal for me, for example. I’ll be sad if they don’t make it through restructuring.

someassemblyrequired > WilliamsSW 05/23/2020 at 09:24

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Important investing lesson, free to students of Oppo

someassemblyrequired > ranwhenparked 05/23/2020 at 09:26

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It really started to go wrong with management when they moved from NJ to FL.   They had a lot of IT problems as well, then the fired the guy who was actually making the fixes.  But yeah, totally dysfunctional.

someassemblyrequired > fintail 05/23/2020 at 09:30

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Yeah I got a lot of duds 10 years ago - cars with 40,000 miles and obvious problems. Things have been better recently, but have (had?)  been using Avis more and more as sometimes Hertz would quote ridiculous rates for pedestrian cars, sometimes 3x-4x what Avis wanted.

someassemblyrequired > jminer 05/23/2020 at 09:32

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Yeah I like the no BS straight to a generally good condition vehicle.   Their pricing has been crazy lately so I have sort of switched to Avis, but if Hertz is close in price, that’s who I go with.

jminer > someassemblyrequired 05/23/2020 at 12:56

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99% of the time I rent for work and they’re usually a few bucks a day cheaper than enterprise and way better. You don’t have do dick around with an inspection when you return the vehicle and get to pick your preferred car out of the lot.

I had to rent from enterprise when my car was in the shop late last year and it took an hour for them to inspect and give me the car, and then they went over it with a fine tooth comb when I returned it and I had to convince them that tiny scratch or this tiny ding was there before I got it.  It reminded me how much I loved renting from Hertz as I had only rented from them for a couple years at that point.

fintail > someassemblyrequired 05/23/2020 at 13:02

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About 18 months ago I got something with 45K on it - it was actually not in bad shape (Sorento), just miled up a bit , and the only car they had left, as I dropped in without warning due to my prior rental being hit and immobilized. I just drove back to my original rental location and exchanged it.

I get Hertz points through an affiliate program, and have status via a match , so I haven’t really paid for a Hertz rental in a long time (maybe that’s part of their problem). Otherwise, I have used Sixt and National, as the former has a more diverse fleet with sometimes amazing rates , and the latter was the best one to choose your own car (but Hertz allows choice now, too).

someassemblyrequired > fintail 05/23/2020 at 16:24

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Yep when they’re good they’re great, and they’ve been a lot more consistent lately, they probably would have been ok/thrived had this not happened.

someassemblyrequired > jminer 05/23/2020 at 16:26

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100% this, I $%# ing hate Enterprise and won’t rent from them just because of this. I also get free CDW with Hertz and Avis too with my corporate rate, so there’s even less chance of issues.

fintail > someassemblyrequired 05/23/2020 at 17:43

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I do hope they can survive. No hard feelings for that company.

My last Hertz rentals were a Grand Cherokee Overland (wrecked, replaced with the Sorento), Sorento, Challenger Scat Pack, Armada (replaced the Challenger as it was going to snow and I didn’t want to deal with that).