Car Rental Companies Are Buying Used Cars Due To Chip Crisis: Bloomberg

The semiconductor chip crisis-fueled car production cuts have compelled the rental-car companies like Hertz Global Holdings Inc HTZGQ and Enterprise Holdings Inc to purchase used cars from auctions, Bloomberg reports.
The rental car companies previously purchased new cars in volume and rented them out for a year, followed by their sale at an auction. They previously purchased used cars for occasional demand spike only.
The demand spike has led to the burgeoning price of second-hand cars, increasing 52% year on year based on Manheim Index.
The car production cut is estimated to translate into higher profits for the rental companies through higher pricing. However, it will affect the demand from vacationers.
Cars are being rented in Florida, Hawaii, Puerto Rico at $100, $200, and $600 a day in Puerto Rico. Higher traveling and lower inventory are further estimated to drive the costs within the next couple of weeks.
Hertz and Enterprise aggressively added low-mileage, second-hand cars from auctions, online auctions, dealerships, and vehicles coming off lease programs to tap the travel rebound.
Price action: HTZGQ shares traded higher by 13.9% at $2.58 on the last check Monday.