Do car rental companies prune to survive or evaporate after coronavirus?

car rental companies

The pandemic has indeed hit the car rental companies in a bad way, just like any other industry. Century-old car rental firm Hertz Global Holdings Inc filed for protection against bankruptcy as a result of the pandemic. Due to the strict government orders asking people to stay home and travel bans, the largest shareholder of the firm Carl Icahn, is under the pressure of debt, as much of the revenue of the firm comes from car rentals at airports and which have faded due to fewer people boarding planes because of the fear generated by the pandemic.

The lease obligations of Hertz have increased due to the decline in the value of vehicles because of the pandemic. They even proposed the selling of 30,000 cars a month in order to provide some respite to their creditors.

Too much aggression to save the business might not be the solution

The tourism business council of South Africa estimates that the travel and tourism industry has lost more than 68 billion of its revenue due to lockdown and states that 600000 people will lose jobs if the sector doesn’t reopen.

As a result of the pandemic, two of the biggest automotive, logistics, and freight companies, Barloworld and Bidvest are on a desperate spree to save their business.

Barloworld’s automotive wing includes Budget and Avis with 43 dealerships in South Africa and Botswana.

The company made an announcement last year that it is going to sell 50% of its Avis business due to low business and in March revoked the decision after the Covid-19 outbreak.

Barloworld and Bidvest are still focussed on cutting down their costs including the laying off process of about 2500 employees in Barloworld and 4000 in Bidvest. Barloworld is even thinking of exiting its logistics wing and has put its automobile wing under review.

Peter Takaendesa, head of equities at Mergence Investment, feels that the struggle that some automotive companies like CMH group, Bidvest, Barloworld, and Supergroup with regards to their dealership cannot be completely blamed on the pandemic and was there even prior to the outbreak of the Coronavirus.

He also feels that this won’t be the right time to completely shut down businesses as the business needs to continue after the pandemic and cutting down employment completely will make your resurrection a very difficult one.

Car rentals can save themselves by adapting to the new normal

Car rentals are definitely going through tough times, just like any other business, but the measures taken at this juncture to stay afloat are going to make all the differences. Cutting down costs is definitely a measure that cannot be avoided but along with that, you need to step up your Car rental management system to assure your customers of a safe and happy ride.

Car rental system
Aswathy Blogger


Aswathy is a content writer and blogger at Pofi technologies. In her free time, you will find Aswathy obsessed over books, news media, and music.

Looking for more?

View pricing Contact sales