COVID-19 is not just a pandemic that threatens our health: it is also a virus that has caused social disruption and economic losses.
With more than 5 million confirmed cases and 300,000 deaths, COVID-19 has also impacted the global economy with the global trade expected to fall by 13% to 32%.
With more than 8,000 business declared closure and a strained labour market in Singapore, it is no doubt that COVID-19 is a stressful situation for many
However, not just in Singapore, many other countries, such as the United States were also affected badly as their layoffs surpass 38 million.
Just like Singapore, many businesses were also casualties of the COVID-19 pandemic.
And this is a story of a bigly company.
The Fallen One
One of the many businesses that were hit includes Hertz Global Holdings, a century-old car rental company. It also operates in Singapore.
It was reported that the majority of Hertz revenue comes from car rentals at the airport, which has unfortunately evaporated as travel plans were put to stop during this period. This has further impacted Hertz’s financial health and has since filed for bankruptcy on Friday, 22 May.
The company has stated that they were unable to reach a consensus with their creditors.
Financial pressure before COVID-19
While many would have said that Hertz is just one of the many victims of the current situation, it is apparent that Hertz was under financial pressure even before the pandemic hit.
As most travellers have shifted from car rental to ride-hailing services, it is reported that Hertz has been losing money for the past four years.
The company has also gone through multiple restructures and replacement of CEOs. It seems like while COVID-19 has definitely affected the business, as the company was already in an unfavourable situation – the pandemic has just made it harder for them to rebound.
The company now has a $19 billion debt with 700,000 vehicles unused due to coronavirus. They have also laid off 25% of their workforce back in march.
US Auto-industry shook
With one of the largest car rental company filing for bankruptcy, it is no surprise that competitors in the automotive industry were shocked.
In 2019, the US rental car industry has purchased approximately 2 million automobiles. Many in the auto industry, including FORD, are worried as their annual sales are now threatened by the pandemic.
With all the uncertainties ahead, most of them are trying to come up with plans to sustain their business while holding a large number of cars – which is an additional cost. Hertz had also sold 54,000 cars in March. But, the question remains, as to whether this amount will be able to keep them afloat until the economy picks up again.
While the current situation is depressing, let’s all keeps our heads up and hope for better days ahead! On a brighter note, Singapore is currently working on the vaccine for coronavirus and are hoping to have early-stage clinical trials next month – we are starting to see some light to the end of this dark tunnel.
But we might not have cars to rent after that #justsaying
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