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Rental Car Companies
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.
Last summer, it was the Detroit Three that were restraining themselves from dumping cars into the gaping maw of fleet sales just to boost the bottom line. Turns out they had some help with that discipline: Due to last year's events, rental car fleets shrunk by 400,000 units from 2007 to 2008. As we begin 2009, rental car companies have declared they will be trimming their fleet orders and curbing the number of vehicles they keep on hand even further.
Privately-held Advantage Rent-A-Car has filed for Chapter 11 bankruptcy protection and is closing almost half of its locations nationwide. Punished by, of course, tight credit, the company has also suffered from higher costs and lower revenue because of reduced consumer travel (a.k.a. the "staycation"). The company isn't closing its doors just yet, but rather looking into various options for itself and its 14 remaining affiliates, "including a sale or merger." In the mean time, it has made arran