Rental car companies would be affected by automaker failures

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Rental car companies are starting to feel some of the same concern that Detroit has been experiencing over the potential bankruptcies facing top auto makers General Motors and Chrysler.

Avis Budget Group, Dollar Thrifty Automotive Group and Hertz Global Holdings all would experience significant impact from American auto maker bankruptcies. Even a filing by one of the Big Three could disrupt the supply of new cars, increase the prices they pay for new cars and very likely lead to lower demand for used vehicles.

The entire automobile industry in the U.S. is in turmoil over the future of GM and Chrysler. The Obama administration is considering a possible solution for GM and Chrysler that would entail dividing their assets into “good” and “bad” categories, and send both auto makers into bankruptcy in order to flush out their largest problems.

Rental car companies have differing degrees of exposure to the major auto makers. Approximately one-third of the Avis fleet in 2008 came from GM and around 14 percent came from Chrysler. Twenty-five percent of Hertz’s fleet in 2008 was supplied by GM, while Chrysler supplied approximately three-fourths of the Dollar Thrifty 2008 fleet.

On Monday, the U.S. government said it would provide Chrysler with sufficient operating capital for 30 days, during which time it needed to work out a suitable agreement with Fiat, the Italian auto manufacturer with which Chrysler already has a tentative alliance.

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