Car-rental companies look to de-fleet early due to COVID-19

As the COVID-19 coronavirus dramatically disrupts the travel industry and decimates demand, car manufacturers are seeing a surge in requests from beleaguered car-rental companies to de-fleet their vehicles earlier than planned due to the collapse in rental bookings. 

COVID-19’s decimation of the global tourism and mobility industries is impacting on demand for rental cars, especially at airports, which is the main business of operators such as Hertz and Avis Budget. The spread of COVID-19 and government measures also mean companies expect limited car-rental activity even when the pandemic starts to recede.

One leading car-rental company CEO says “When de-fleeting, car rental fleet values face a potential hit to vehicle values across the wholesale used vehicle market, which needs to be managed to avoid heavy losses. Assuming buy-back contracts allow rental companies to return their cars early, this will increase the supply of very young used cars”

As rental fleets, which are normally returned after six to 12 months, enter the used-car market in larger numbers (as cars aged less than six months), prices are likely to be discounted. Finding buyers, however, will be challenging in these unprecedented times. Any increase in the supply of young used cars as rental companies de-fleet, in addition to the demand shock for new cars, should precipitate a fall in residual values (RVs). 

TEC Group’s highly experienced vehicle engineers ensure accident damaged de-fleeting vehicles are effectively and efficiently managed, ensuring that vehicles are in the best condition for resale with the best price possible realized on used fleet vehicles.