Good news for automakers: Someone is buying cars. The CEO of rental-car giant Hertz Global Holdings Inc. (NYSE:HTZ) on Thursday said (see video below) the company has seen demand for rentals stabilizing in the U.S. and Europe, predicting that after two quarters of losses the firm will return to profit in the second quarter.
Hertz CEO Mark Frissora in an interview on CNBC Thursday morning said the company is "literally scrambling to buy as many cars" as it can on an anticipated post-recession spike in demand, saying the company has spent $350 million on 16,000 vehicles in the last six to eight weeks. Among the purchases are cars made by bankrupt General Motors Corp. and recently emerged Chrysler Group LLC.
But while any buyer of new cars is good news for automakers, wholesale buyers like rental companies are unlikely to lead the industry out of its doldrums. Indeed, domestic carmakers have long been criticized for their reliance on fleet sales to rental companies.
Simple math paints the picture of Hertz as an opportunistic buyer, likely taking advantage of automaker and dealership need to shrink inventories. Hertz paid an average of $21,875 for the vehicles it bought over the last two months, well below the $26,000 average price of a light vehicle in the first part of this year. - Lou Whiteman
Lou Whiteman is a senior writer covering the automotive, transportation and industrial sectors. Follow him on Twitter @louwhiteman
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