General Motors has agreed to take back cars that were in the process of being delivered to ailing rental car companies Hertz, Enterprise and Avis.
According to Automotive News, the three rental companies cancelled orders for GM vehicles for May, June and July this week, with the automaker redirecting the vehicles to dealerships short on inventory. In a filing on Tuesday, Hertz said it does not expect to buy any new rental vehicles for all of 2020.
Hertz’s business has been hit particularly hard during the COVID-19 lockdown. The company was granted some leeway from banks earlier this week, saving it from imminent bankruptcy, with lenders advising the company to “develop a financing strategy and structure that better reflects the economic impact of the COVID-19 global pandemic.”
Slowing fleet sales are a blow to GM and other automakers with large fleet businesses such as Hyundai, Fiat Chrysler Automobiles and Toyota. AN says fleets represent about 20 percent of U.S. automotive sales, the vast majority of which go to rental companies. Sales to firms like Hertz and Avis typically buoy sales when retail business is low, but automakers evidently will not be able to rely on rental fleet sales throughout 2020.
Hyundai redirected cars bound for rental companies to its overflow inventory lots this week, while FCA was forced to cancel about 30,000 orders for rental fleet vehicles. FCA had tried to direct some of the vehicles to dealerships, though this fell through due to “logistical reasons,” a spokesperson told AN.