Hertz Bankruptcy & Fleet Liquidation Threaten to Make Mess of Used-Vehicle Prices with Burst of.....

[marmar]

Hertz Bankruptcy & Fleet Liquidation Threaten to Make Mess of Used-Vehicle Prices with Burst of “Pent-Up Supply”
by Wolf Richter • May 24, 2020 •

Here come the “bankruptcy-remote special-purpose subsidiaries” and $14.5 billion in rental-vehicle-backed securities. The stock market – other than Carl Icahn – smelled a rat for years.
By Wolf Richter for WOLF STREET.


The Chapter 11 bankruptcy filing of Hertz Corporation and its US and Canadian subsidiaries Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen – but not its subsidiaries in Europe, Australia, and New Zealand – on Friday May 22 threatens to make a royal mess of used-vehicle wholesale prices, as creditors may take possession of their collateral and dump hundreds of thousands of vehicles on the wholesale market starting in late July, pushing down wholesale prices further and creating further valuation pressures and bigger losses for Hertz creditors, the entire rental car industry, and leasing companies that also have to dispose of their vehicles.

This is the scenario the industry has been dreading for the past 10 weeks or so, when the distant likelihood of a Hertz bankruptcy suddenly became front and center. Hertz has already laid off about 20,000 people, or about half of its global workforce, it said in its bankruptcy press release.

On April 29, Hertz disclosed that it had missed a lease payment on part of its fleet. And this is where it gets interesting, in terms of financial engineering and corporate complexity.

Hertz, which runs the second-largest rental fleet in the US behind Enterprise, owns its fleet in two types of setups: as “program vehicles” and “non-program” (or at-risk) vehicles. .....(more)

https://wolfstreet.com/2020/05/24/hertz-bankruptcy-threatens-to-make-mess-in-the-used-vehicle-market-with-burst-of-pent-up-supply/

[duforsure]

1. All real estate will also see prices crash

Because of this trump mess he's put us in. Now trump and Moscow Mitch are trying to stiff us and small businesses with way too little, way too late , and driving this country towards a trump depression. They funneled again billions to big corporations, and now want to give us nothing, and destroy Medicaid, Medicare, and Social Security, even though he claimed he wouldn't, but once again he lied. Auto sales will bankrupt many car makers, some will be gone for good.

[progree]

2. Social distancing could be a boon to used car sales, Yahoo Finance, 5/22/20

https://finance.yahoo.com/news/social-distancing-could-be-a-boon-to-to-car-sales-181642918.html

... “We’ve seen a huge increase of people coming to shift.com,” says George Arison, founder and co-CEO of the peer-to-peer car marketplace. ”It's been kind of incredible.”

Arison told Yahoo Finance’s The First Trade business picked up after initially declining due to shelter-in-place measures to contain the virus.

“Within a couple of weeks, sales came back. We finished April down, only about 11% off of February and May is now trending to equal where we had hoped April would be, pre-pandemic, with pretty substantial growth over last year,” said Arison.

... “A lot more subprime applicants for financing for example, a lot more searches for domestic versus foreign made cars, and people are buying cheaper vehicles” he said, noting customers are spending about $1500 less per purchase — eyeing starting prices of around $14,000 versus $15,500 pre-pandemic.

... Arison believes people will use less ride-sharing services such as Uber (UBER) or Lyft (LYFT) due to social distancing.

Some people are even required to avoid it. The New York Stock Exchange told its employees they need to avoid public transportation when some of them go back to the floor when it re-opens next Tuesday.

I'm closely watching what is happening to our local public transportation system with great fear and horror. And watching state and local finances going way south. Anyone thinking public transit is going to operate indefinitely at maximum 1/4 capacity for social distancing is fooling themselves.

[sandensea]

3. The kings of fictitious dings and scratches.

Good riddance.