Car Hire Companies Lose Money

The rental car industry took a major hit to its stock prices this week, as news of falling profits reached the ears of the market. The worries about the overall health of the rental car sector caused prices to fall sharply.

Dollar Thrifty released a statement early Tuesday that warned investors about the depreciation of its primary assets, the vehicles it owns, and that it’s third-quarter profits will be lower than anticipated, due to the bankruptcy of one of its partner tour operators. Christopher Agnew, in a note to investors, said: “The auto rental industry is over-fleeted and pricing in September now appears to be below our initial expectations.”

Because of those shortfalls, the industry is suffering from a decrease in operating revenue. After news broke, Dollar Thrifty shares fell by $1.47, or 32.3 percent, to 3.08. The stock has lost more than 85 percent of its value in the last year, bottoming in July at $2.31. The Oklahoma-based company has said that it may seek to use a portion of its total liquidity to repay long-term debt, in order to maintain compliance. Agnew also expects that weaker prices will harm Avis Budget Group and Hertz Global Holdings, as well. For all three companies, according to Angew, results are “uncertain”. In afternoon trading, Hertz shares fell 70 cents, or 8 percent, to $8.11. During the past 52 weeks, the stock has dropped from a high of $25.25 last October to touch a low of $5.52 in July.

Learn more at: www.hertz.com, and www.thrifty.com