On Thursday, Hertz Global shares tumbled 24%, marking their largest one-day percentage drop in history. The company had reported a larger-than-expected quarterly loss, which highlighted its difficulties in the EV rental business. In response to weak demand, Hertz announced plans to streamline its operations, including the sale of 10,000 more EVs, bringing the total planned sales for the year to 300,000. Additionally, higher repair costs contributed to the company’s increased fleet maintenance expenses, putting additional pressure on its financial performance.
Hertz, headquartered in Estero, Florida, disclosed that it incurred a $588 million expense in vehicle depreciation costs during the quarter, with $195 million related to EVs held for sale. Newly appointed CEO Gil West attributed the weak quarterly performance to fleet and direct operating costs. Excluding certain items, the company reported a loss of $1.28 per share, significantly higher than the expected loss of 44 cents per share on Wall Street.
The disappointing results of Hertz led peer Avis Budget Group to see a 7% decrease in their shares as well. Both companies have seen their market value drop by around 50% this year. The challenging economic conditions faced by these rental companies in the EV market underscore the broader struggles of the transportation industry in adapting to changes in consumer demand and operating expenses.
In an effort to address these challenges, Hertz announced plans to streamline its operations by selling more electric vehicles (EVs) and cutting back on direct operating costs. However, despite these efforts, Hertz still saw significant losses due to high repair costs and weak demand for EV rentals.
The challenges faced by Hertz are not unique – many other companies in the transportation industry are struggling to adapt to changes in consumer demand and operating expenses as well. As such, it remains to be seen how successful Hertz’s efforts will be in turning things around and whether they can overcome these challenges long term.
Overall, it is clear that the rental car industry is facing some significant challenges right now – particularly when it comes to adapting to changes in consumer demand and operating expenses related to electric vehicles (EVs). While some companies may be able to weather these challenges better than others (such as Hertz), ultimately it will take time and effort from everyone involved if we want this industry
