- Jan 30, 2009
Rental car companies latest to seek TARP funds
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]