Rare Sign of Hope in the Auto Market

One story in the auto crisis that has not garnered as much attention is the auto rental market. This morning, Hertz CEO & Chairman Mark Frissora joined me immediately following a press release from the company announcing guidance for Q2 and the full year. Hertz had suspended guidance because of the weakness in business due to the collapse of the economy. Today, the company came back to the Street with surprisingly good news -- on the heels of an article in The New York Times that reported the average rate for a compact car booked 7 days in advance was up 73% from the same month a year ago.

Frissora said business in the U.S. & Europe picked up substantially beginning 10 weeks ago. Reservations are now up 9 straight weeks in both countries. Frissora noted consumers are spending less time traveling overseas and are instead selecting local destinations that they can drive to. They're seeing demand across the country but particularly in travel destinations like Florida, Southern California and the Northeast.

In addition to buying new vehicles, seeing residual values rise despite the bankruptcy filings of GM and Chrysler, Frissora believes the rental by the hour car business that Hertz calls "Connect by Hertz" is a great place to invest with a $1 billion dollar marketplace. He feels they can take a piece of that pie and compete on price with Zipcar.

Good to see good news in this economy. I find this story very telling. We keep talking about signs of hope. This is a sign of hope.