General Motors Recallapalooza Was Bad News For Rental Car Companies, Too

hertzcarfuntimeThis year’s vehicle Recallapalooza hasn’t just been bad news for General Motors and for nervous vehicle owners waiting for repair kits. Having fewer cars on the roads has been bad for major car rental companies, too, at a time that was supposed to be a renaissance of sorts for that business.

This week, Hertz withdrew its predictions about its performance this year, citing an audit of all of its financial reports going back to 2011 and “operational pressures.” The strongest pressure has been the number of cars in their fleet that were part of the General Motors recall.

As the company explained in its latest report to shareholders:

While demand was trending ahead of plan, transaction days in the 2014 second quarter were tempered by already tight fleets in the face of rising OEM recall activity, which limited the Company’s ability to convert demand into transaction days.

That means Hertz had people ready to rent cars, including in the vacation market, which is more lucrative than boring old insurance or business travel rentals. However, the number of vehicles out of commission due to various manufacturers’ recalls meant that Hertz couldn’t accommodate all of that business.

Bad Timing For Hertz: Rental Demand Rises, But So Do Auto Recalls [Wall Street Journal]

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