Rental fleet collapse drags down US vehicle sales

Unused rental cars fill the Dodger Stadium parking lot as the spread of the coronavirus disease continues, in Los Angeles, California, US. REUTERS

The collapse in demand for new vehicles from US rental car fleets hit automakers hard in May, even as consumer sales were stronger than expected as coronavirus stay-at-home orders began to ease.

The collapse of air travel has pushed big car rental companies to cancel orders for new vehicles, punching a hole in sales for nearly a dozen US automakers’ including the Big Three in Detroit.

Hyundai Motor Co’s US sales arm said Tuesday that its sales to fleets, including rental companies, fell by 79 percent in May, while retail sales grew by 5 percent.

Automakers could lose up to 12 percent of their annual US vehicle sales in 2020 as car rental companies slammed by the coronavirus pandemic slash fleets and restructure, according to Jefferies.

The retreat by rental car companies threatens production and jobs at US factories that build vehicles popular with rental car fleets such as Hertz Global Holdings Inc, which filed for bankruptcy protection late last month.

Hertz has said it negotiated with US manufacturers to cancel about 90 percent of its remaining 2020 fleet orders and has no plans to purchase new rental vehicles for the US fleet. Likewise, Avis said it disposed of 35,000 cars in May and canceled 80 percent of its incoming rental vehicle orders in the US for the rest of the year.

“At least 80 percent of new purchases stand canceled post COVID-19,” said Hamzah Mazari, a Jefferies analyst. He predicts corporate travel won’t recover until 2022 “at the earliest.”

In 2019 alone, listed rental companies Hertz and rival Avis Budget Group Inc together purchased about 970,000 vehicles, from about a dozen automakers, down about 2.4 percent from a year ago, according to Jefferies.

The global pandemic hit rental fleet sales hard in April, pushing them down 77 percent, or about 108,000 vehicles, according to Cox Automotive. Retail sales were off 41 percent, or just over 400,000 units. For May, the consultancy expects sales to be down about 33 percent versus May 2019.

IHS, which closely tracks automotive sales and production trends, said it expects global light vehicle sales to fall 22 percent to 70.3 million units in 2020, from prior estimates of a more than 12 percent drop. (REUTERS)

Related post

2022 KTM Adventure 390 launched in India

KTM has officially revealed the updates on the Adventure 390. The all-new 2022 Adventure 390 comes with major upgrades to the bodywork and features, such as the addition of two-mode traction control: street mode and off-road mode.

Read More

TVS Ntorq 125 XT launched in India

TVS Motor Company has launched its new scooter–the Ntorq XT–in India. The newly launched scooter is the company’s most expensive model in its Ntorq-125 series. The XT is based on Ntorq’s disc brake variant, but comes loaded with new features and technology. The scooter has been launched in India at a starting price of INR 1.03 lakh.

Read More

Ioniq 5, Kia EV6, and Taigun nominated for the 2022 World Car Awards

The Hyundai Ioniq 5, Kia EV6, and Volkswagen Taigun have all made it to the 2022 World Car Finals in their respective categories. The Ioniq 5 has been nominated in three different categories, the EV6 in two, and the Taigun in one.

Read More

GWM Haval H6 earns five-star ANCAP safety rating

Great Wall Motor’s (GWM) HAVAL H6 has received high scores in the rigorous Australasian New Car Assessment Program (ANCAP) crash test,

Read More

Komaki debuts in Nepal with two electric scooters–the Venice and the SE

Komaki Electric Vehicles, the Delhi-based EV maker, has debuted in Nepal with the launch of two electric scooter models: the Venice and the SE. Unity Trading Concern Pvt. Ltd has taken the role of distributing the Komaki Electric vehicles in the country. Design The Venice, a retro-styled scooter, comes with a circular LED headlight, LED […]

Read More

Shadow Top Brand Shadow