Rental Car Damage: Fill & Download for Free

The drop off at the Dublin airport. We returned the car with a superficial scratch on the rear passenger door. The scratch did not penetrate through the clear coat and was easily buffed out. (I’ve painted cars in the past.). The rental firm sent me an invoice for $1,300 to repaint the entire driver’s side of the vehicle. It was bogus to be sure. I’m skeptical that the work was ever done. After some ‘pushing’ my credit card issuer covered the expense under their full insurance coverage for any rental car damages. Chase Bank brags about this coverage but makes it very difficult to collect. Imagine that.Dublin Airport rental firms are known for this knacker behavior. Beware.

Yep !Got out of bed at 3am in the UK and drive a hire car to Heathrow airport.Took a flight to Israel where I was working.Got a hire car from ben Gurion and drove to Haifa where I was staying..At a junction just outside Matan got the lights wrong crossing an eight- lane road at 5pm.There was then a very loud bang.My Mazda 3 hire car was converted from 4 wheels to 3 !The people in the car that hit me were not hurt which was good as it was my fault.I called Hertz telling them I need a tow truck as the car was blocking the road and all they said was they would get me a replacement car in the morning and ignored my telling them that the remains of the car were blocking the road !The police called a tow-truck and sorted itAnyway two weeks later I returned the replacement hire car and the guy at the desk said he was sorry but they could not return the $50 deposit as the damage on the car was more than $50. No kidding I was a three-wheeler with the engine ripped out and that literally dropped out when the tow-truck tried to pick it up !

Hertz is in serious trouble.(And so is pretty much every other major rental car company out there.)Here is the VERY abbreviated way that rental car companies make money:Rental company buys brand new car using financing.Rental company rents car at break-even rate. In other words, the company just needs to rent the car at a rate where they can make the loan payment.Rental company sells the car in the secondary market when principal is paid off.Rental company only makes money from the sale of the car, not the actual renting of the car.Like I said, that is a very abbreviated version of what really happens, but it’s essentially the principle they stick to.In reality, the car rental company tries to turn over the cars faster in order to not get stuck with older modeled cars.BUT HERE IS THE PROBLEM…Hertz and many other rental car companies have been able to buy cars with ridiculous cheap financing. Basically, they are borrowing money for free in order to purchase new vehicles.This has created a scenario where rental car companies are extremely leveraged.The assumption is that their car inventory is the collateral to that leverage, so the ‘worst case’ is that they start selling their cars to pay off their debt.But… there is this thing called over supply of used cars in the market AND there is also a couple new companies that go by the name of “Uber” and “Lyft.”If our market sees a downturn, these rental car companies will have a very difficult time offloading their inventory. And, if they can’t sell cars, they can’t service their debt.In addition to the risk of a weakening market, people are simply not using rental cars (and cars in general) like they used to.Rental car companies are facing a scenario where they are extremely leveraged with the possibility of not being about to un-leverage themselves… that is a game over scenario.And once a couple rental car companies start to default, the used car market will start to get flooded with inventory, which will create further pressure on other rental car companies that have to make money from selling their inventory.No bueno.-I actually recommended shorting Hertz late last year. I also recommended a couple other companies that will suffer from this decline as well, as there will definitely be collateral damage.