Several months ago, we noticed parking lots across the US were quickly filling up with rental cars as the entire car rental industry collapsed. The virus-induced recession crushed the travel and tourism industry, so it would only make sense that indirect industries, like rental cars, would get hammered.
In May, rental car fleets were being shifted from airports to massive parking lots at sports stadiums from Philipedia to Los Angeles; the pictures below show the magnitude of the collapse:
MCM might have uncovered the evolution of what happens to rental cars after they’re temporarily parked at sports stadiums or massive parking lots – that is, as he describes – ends up in a “death yard” – as Hertz and other rental car companies will eventually markdown these assets from their respective balance sheets.
On Sunday, MCM’s Twitter post said he “drove past” the Palm Beach International Airport on Saturday and uncovered a huge parking lot of “rental cars needing maintenance/out of commission.”
Drove past the WPB Airport yesterday & saw this:
A DEATH YARD FOR RENTAL CARS NEEDING MAINTENANCE/OUT OF COMMISSION
1. EVERY CAR mechanical issue marked on window
2. THEY ARE BAKING IN THE
3. WILL TAKE YEARS & $$$ TO GET THROUGH THESE REPAIRS
Can you say asset impairment? /1 pic.twitter.com/oSLi0JoBkv
— mcm-ct.com (@mcm_ct) July 12, 2020
He said, “every car” had mechanical issues “marked on” the window – as they bake in the South Florida sun. He said it would “take years & $$$ to get through these repairs,” as he suggested: “Can you say asset impairment?”
From the street, MCM snapped a panoramic view of the parking lot with at least a thousand of these cars left in the sun to die.
He shows every window is “marked with mechanical issues.”
Here’s another angle of the yard – with a closer look – all of these vehicles are basically brand-new.
MCM said: “Anyway you look at it, its YEARS OF INVENTORY that is sitting baking in the sun…it is a major operation imo just to find the keys for these cars let alone repair and move them – they will be there for a very long time it seems and that means these cars will deteriorate a lot.”
Adding that, “DON’T WORRY THE @federalreserve CAN FIX THIS as @neelkashkari is on the job.”
And if MCM is right – Hertz and or other rental car companies could be on the cusp of writing down their vehicle fleets as the anticipation of steady cash flows from these assets are now deemed unrecoverable as the whole travel and tourism industry has gone bust and will remain depressed for years.