• Jan 30, 2009
Feel that breeze? It's the draft coming through the front door. The door that was opened a crack to let in the banks and Detroit Three but has been pushed wide open. The latest industry to claim distress is from another automotive sector, the rental car business. Yes, The Wall Street Journal is reporting that rental car agencies are now seeking Troubled Asset Relief Program funds, too.

The backstory goes like this: As the economy has tanked, business and leisure travel has slowed and demand for rental cars is now at its lowest point since the 1970s. The agencies aren't selling off their used fleet vehicles as easily, either, so times are tough indeed at the rental counter. That's why Enterprise, Avis, Budget, Hertz, Dollar, Thrifty and others are asking Congress to help out the industry. They want Congress to let them tap into TARP money. The House of Representatives has already added a clause that would allow the government to back loans for rental-car companies and other fleet buyers, and now the issue goes before the Senate.

The thinking behind all of this is that America needs the Detroit Three to sell more cars, so allowing fleet purchasers easier credit will result in additional sales by the thousands. Critics suggest that what the plan fails to consider is that fleet sales tend to be extremely low margin sales that don't add much to the automakers' bottom line. Further, if fewer people are renting these new cars, it doesn't make sense for agencies to be buying them in the first place. Thus, opponents believe that most rental companies are more likely to forgo updating their vehicles in favor of maintaining their existing fleet. Us? We just want to see more Hertz ZHZ Corvettes available on the cheap.

[Source: The Wall Street Journal]


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    • 1 Second Ago
  • 20 Comments
      • 5 Years Ago
      Well, folks, the precedent has been set. Is every industry that's feeling the slightest pinch going to go to D.C. with hands out and some freaking sense of entitlement?

      Times are tough. Suck it up, go "lean and mean" until things improve, but most of all, adapt to changing times because the landscape is going to look a little different coming out of all this. Competition is good, but seriously, how many flavors of tooth paste do we need?
      • 5 Years Ago
      So where does it end? The government isn't an everlasting well of money.
        • 5 Years Ago
        damnit. Long story short....

        Recession is going to help our country in the end. The government just needs to stop handing money out to every industry that is hurting. Everyone is hurting for a reason and companys that were staying afloat on the early 2000's bubble need to die for reason and thats what the recession is going to do. All this bailout crap is going to do is move the problems onto the next person (president, congress, whoever). I just want to know where the damn buck stops!, and when these government pigs we elect to represent us will stop doing things for the better of themselves and do things the the better of the people he/she represents.

        This stuff is starting to get crazy, and to think all we can really do is sit back and watch as our hard earned money is throw away to companies that care more about their executive weekends then us. You know very well the big dogs of fortune 500 companies don't care about people, they just care that they remain in their position of power for as long as possible. Can't they just write us a check and let us spend it how we want? That way they wouldn't have to give banks money, because... oh yeah... THE PEOPLE would have money. They wouldn't have to give automakers money... because... oh yeah... the people would have money; so they could pay off their debts and then get financing to get a new car.

        But then again... This is just a post on autoblog. And it's not profitable in any way.
        • 5 Years Ago
        i hope the long post I just typed makes it onto this, and not lost in the Comment Glitch Black Hole.
        • 5 Years Ago
        "So where does it end? The government isn't an everlasting well of money."

        No, but they think you are.
        • 5 Years Ago
        I just don't want to go back to the early 90s business trips nightmares of driving Cutlass Cieras or Luminas.....aaaarrrggghhhhhh
        The rentals nowadays are actually such enjoyable experience, even if you are not in the Hertz President and Avis First clubs.
        • 5 Years Ago
        When you own the printing press, you can make as much money as you want. Congress is always ahead of inflation with their pay increases every few years.
      • 5 Years Ago
      Step 1: Place Gear into "N".
      Step 2: Rev Engine to 5500.
      Step 3: Drop Gear into "D".

      Repeat as Need.


      • 5 Years Ago
      Ok...hey...I'm so gonna walk into a Home Depot and after picking up a tarp, say to a cashier - "Oh I'm sorry I cant pay for this. I don't have enough TARP Funds"

      *giggle*
      • 5 Years Ago
      Who's going to be next in line? The porn industry is going to start complaining because since the slowdown people arent spending as much on hardcore anymore.

      This is (one of the many reasons) govt. bailouts are retarded. You give some money to one group and 1000 others stick their hand out for something free.

      During all the previous recessions we've had in this country I don't remember the government handing out a trillion+ dollars to people, and people got thru those times just fine.

      • 5 Years Ago
      I'm also a current ERAC employee and can vouch that ERAC is not part of this grouping. ERAC's bread and butter has always been the insurance replacement business, I can vouch that people are getting their cars repaired and insurance companies are still paying for their customers to get in rentals because I'm directly involved in that part of the business. Let the companies that can't plan ahead fail, ERAC will be more than happy to pick up their slack.
      • 5 Years Ago
      Last month when i went to rent a car the San Diego airport Avis counter, there was hardly any one there. Same thing when I went in 2 or 3 other times to correct some paperwork and exchange the car. There were a ton of cars on the lot too. But this was in the first week of January, so it may have been a slow time anyway. But I just thought that it was weird that they had 3 or 4 counter people and I was able to walk right up to any one of them without a line all 3 times.
      • 5 Years Ago
      At the rate this is going, why not just give everyone $100,000 to spend on whatever they want?
      • 5 Years Ago
      Enterprise is not looking for TARP funds...they are privately held and lost the least amount of money last year amoung the largest car rental companies. They also own National and Alamo....so I don't know where the fact checking comes in, but that statement is false, oh yeah I work for them too, that's how I know.
        • 5 Years Ago
        Although to be fair, the WSJ article sort of implies that Enterprise is asking for a bailout, without actually saying so
        • 5 Years Ago
        Yeah because CEO's of multimillion dollar corporations consult with mid level management and sales clerks before they proceed with business decisions.
        • 5 Years Ago
        For Enterprise and other rental car companies, the rental outlets are satellites dispersed all across the nation away from the main corporate headquarter, so you may or may not hear everything at the water cooler when you are several states away from where the action is. If the reporting by the Wall Street Journal is truly in error, then Enterprise's PR department needs to issue a statement to set the record straight.

        Wall Street Journal: "Last month, the chief executives of Enterprise, Avis, Hertz and Dollar Thrifty Automotive Group Inc. sent a letter to House leaders pressing them to help the industry. 'The impact of the declining economy on our business has already resulted in significant cost reductions, staff cutbacks and facility closures,' they wrote. 'In addition, our industry faces significant near term financing challenges...We therefore believe that government action is necessary to help restore access to capital.' "
        • 5 Years Ago
        I used to be a manager for them too, have many friends that still are, and I can vouch for them not asking for any sort of bailout money. Seeing as how Enterprise/National/Alamo has the largest fleet in the nation by some margin (they buy more GM vehicles than any other single entity in the world, for example) this is an important fact for Autoblog to get right before they throw everyone under the bus in one fell swoop.
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