The Hertz Car Rental Company has applied for credit protection and liquidation protection, also called for bankruptcy. Hertz announced that it could not pay its debts totaling eighteen billion and seven hundred million dollars, with only $ 1 billion remaining.
The announcement does not include company branches outside the United States and they will continue to operate normally. The Hertz branches also continue to operate for the time being. Outgoing CEO Catherine Marinello announced that no company can continue to rely on a situation where it has no revenue
The Corona epidemic caused the Hertz company heavy losses and it almost completely ceased its operations in North America. A few weeks ago, Hertz fired about 12,000 workers and took four thousand more leave without pay. Also, ninety percent reduced the purchase of new cars
One hundred and two years ago, the rental company was founded by Walter Jacobs. First it was called Rent a-Kar. Five years after it was founded, he sold it and a fleet of twelve Ford cars to businessman John Hertz.
Hertz also owns the Thrifty-Dollar rental company. Hertz Israel has been active since 1965, making it one of the oldest rental companies in the country. In 1985, the world runner moved to Israel in connection with Rent A Car, owned by Meir, a Honda Volvo importer. Hertz Israel's activities also include the activities of the Auto Center trade network and leasing company "Upright Lease". The effect of the global runner's bankruptcy course on the Israeli market is unclear at this time.
The corona crisis that has stopped car rental is not the only crisis the rental companies are facing: car sharing services, car financing services such as UBER and the prospect of moving to cooperative autonomous vehicles have reduced the scope of global rental companies' activities in recent years.
The automotive industry today estimated that the crisis in the inbound tourism market is expected to have a significant impact on the new car leasing and leasing companies' purchases in March and April, which are key months ahead of the traditional Passover holiday season. This is a potential drop in thousands of cars and potential cancellations of existing orders.
Midroog adds that "the leasing companies, operating in a large fleet maintenance model and leasing it to employers (mainly) for employee mobility, rely on high volume debt - with a capital to balance ratio of between 12% and 18%. The high level of debt is used mainly by leasing companies The establishment and preservation of the fleet over the years. "
Midroog claims that the financial flexibility available to the leasing companies to cope with "stop borrowing" as a result of the crisis includes a number of dependent measures during the crisis. The main one is the realization of their fleet, or part of it, but "it probably won't be the first resort." Even before, companies can take steps to postpone the debt cycle in the capital market, especially in the short term, such as diverting funding for banks and institutional bodies through private loans (such as car importers), extending leasing transactions, a process that can be effective for several months, extending vendor credit. And as mentioned, reducing the fleet of vehicles and selling vehicles.