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Decline in rental car business may impact used car market

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CARTERVILLE (WSIL) -- Hertz is declaring bankruptcy, and it could have an impact on car shoppers.

Kevin Sylwester, interim director of SIU's School of Analytics, Finance, and Economics, says the company may sell off a good portion of their cars.

"They need cash right now, and that's the way they're going to generate cash is to dump a lot of cars on the used car market.

Steve James, owner of Elite Auto Sales in Herrin, says while he hasn't seen a big drop in demand for cars, he has seen a big drop in supply, which he adds has brought the market up.

"Yes, they're going to make them cheaper, but the market has came up dramatically since this all started in the last 30-45 days, big time. But now it's gonna have a bearing on it, but is it gonna have a bearing of, you know, say a vehicle that's normally $13,000 and bring it down to $9,000? No, I don't see it."

Sylwester says a big influx of cars on the market would somewhat counteract the supply problems the market is currently facing.

"There's less demand for cars, and that should cause car prices to fall, but there's also supply effects. Car manufacturers are just now, in the last couple weeks or so, getting back on line producing cars again. So all by itself with nothing else going on, lower supply should raise prices."

James says the lower supply has driven the market up, but the addition of more cars on the market, whether it be from a large number of rental cars hitting the market or manufacturers resuming production, may drive it back down. Meaning, an influx of cars could bring cheaper prices for consumers.

"They know the market's up, on those right now, so I'd say they're gonna start trying to sell these cars real fast, while the market's up. Now when they start flooding the market, it's going to bring the market down of course."

While Elite Auto Sales in Herrin says COVID-19 has brought a small decrease in business, it hasn't been devastating. They say they are primarily seeing a drop in demand for their higher tier cars, adding, they still have a plenty of demand for cars less than $15,000.

John Ross

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