Why is Hertz going out of business?

The decreasing value of its vehicles and declining profit margins put significant strain on the company's financial health. With approximately $19 billion in debt and a sharp decline in travel due to the pandemic, Hertz was forced to file for bankruptcy.



Contrary to rumors of a total collapse in 2026, Hertz is not currently "going out of business," but it is navigating a difficult financial recovery. After filing for Chapter 11 bankruptcy in 2020 due to the pandemic, the company successfully exited in 2021 with new backing. However, by February 2026, Hertz reported wider-than-expected losses, largely driven by a failed massive bet on Electric Vehicles (EVs). High repair costs and a sharp drop in the resale value of its Tesla fleet forced the company to sell off thousands of EVs at a loss. Additionally, external factors like recent federal government shutdowns and FAA flight cancellations in early 2026 further suppressed rental demand. While the company is undergoing a "turnaround plan" under CEO Gil West to stabilize its fleet and improve service reliability, the financial strain from depreciation and high operational costs remains a significant hurdle for the rental giant's long-term profitability.

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The decreasing value of its vehicles and declining profit margins put significant strain on the company's financial health. With approximately $19 billion in debt and a sharp decline in travel due to the pandemic, Hertz was forced to file for bankruptcy.

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Hertz was crippled by the coronavirus pandemic in the end. However, high levels of existing debt meant the company could not survive a downturn in the travel industry. As competitors such as Uber and Lyft rose to prominence, Hertz had less revenue to service its debt-fronted business model.

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Hertz Falls Most in Year After Earnings Beat But Costs Rise plunged the most in more than a year after reporting rising costs, even as earnings for the second-quarter beat analyst estimates. Weaker car prices in the US nearly tripled the depreciation of Hertz's vehicles, to $195 a car per month.

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Second quarter revenue of $2.4 billion was characterized by continued strength in demand. Volume increased 12% year over year while average fleet was up 9%. Monthly revenue per unit in the quarter of $1,516 benefited from utilization of 82%, an increase of 230 bps relative to Q2 2022.

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The Rating Outlook is Stable. Fitch has also affirmed Hertz's senior secured term loan and senior secured revolving credit facility at 'BB'/'RR1' and senior unsecured notes at 'B'/'RR4'.

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In short, the declining value of the Tesla cars in Hertz's fleet—a decline directly caused by Musk's price cuts—has hit Hertz squarely in its profits. The fact that this is happening to Hertz of all companies is ironic, as the rental agency is not just any customer of Musk.

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Hertz will pay $168 million to settle 364 claims related to the company falsely reporting rental cars as stolen. These cases sometimes resulted in people being arrested and even imprisoned.

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Article continues after video. In 2021, Hertz placed the largest-ever vehicle order when it bought 100,000 Tesla Model 3's for the sum of about $4.2 billion, skyrocketing Tesla's value to $1 trillion, according to Bloomberg.

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With approximately $19 billion in debt and a sharp decline in travel due to the pandemic, Hertz was forced to file for bankruptcy. However, it emerged from bankruptcy in July 2021 after securing new investment funding and eliminating debt, coinciding with increased demand for rental vehicles.

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OVERVIEW. Recognized as a worldwide leader in rental and leasing services and products, Hertz Corporation is an indirect wholly owned subsidiary of Ford Motor Company with approximately 7,000 businesses located throughout the United States and in more than 140 other countries.

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