Hertz: Lower Revenue, Higher Expenses "Transitory"

Photo courtesy of Hertz Corp.
Photo courtesy of Hertz Corp.

Hertz Global Holdings Inc. reported its third quarter 2014 U.S. revenue of $1.8 billion, in line with last year’s third quarter. This year-over-year revenue comparison is partly impacted by the ending of the Advantage vehicle sublease in November 2013, says the company.

In third quarter 2014, transaction days increased 5% year-over-year. Although there was a rise in contracted bookings in June, transaction days in Q3 were tempered by tight fleets in the face of increasing OEM recalls, according to Hertz.

Hertz’s U.S. car rental total revenue per day (RPD) decreased 4% year-over-year. For airport rentals, Hertz’s total RPD declined 2% in transaction days.

For the full-year 2014, corporate EBITDA is anticipated between $1.3 billion to $1.45 billion, which reflects the impact of adjustments relating to the ongoing accounting review, says the company. These earnings are being affected by lower U.S. car rental fleet efficiency and higher fleet maintenance, damage and depreciation expenses.

"We believe the lower revenue growth and higher direct operating expenses we are experiencing in 2014 are transitory, primarily associated with fleet and systems integration challenges related to the Dollar Thrifty acquisition as well as some execution issues,” said Brian MacDonald, interim CEO of Hertz. “We are addressing the operational issues by strategically repositioning the fleet, hiring incremental sales and maintenance staff and migrating the Dollar and Thrifty financial and counter systems onto Hertz systems. Accordingly, 2015 will represent a transitional year with a more normal base performance becoming evident in 2016."

In order to reduce costs by about $100 million annually, Hertz plans to reduce general and administrative expenses, reduce information technology and capital investments, as well as reduce external strategic advisor expenses. According to Hertz, it expects to achieve these savings by the end of 2015.

Additionally, Hertz has announced a new fleet purchasing strategy. It will purchase around 350,000 model-year 2015 vehicles in the U.S., approximately 60% more than the 2014-MY vehicles, according to the company. About 25% of the 2015 fleet buy will be delivered in fourth quarter 2014. And 70% of the U.S. operating fleet is expected to be risk vehicles in 2015 compared to 85% in 2014.

Financing for the fleet vehicles will be funded through Hertz’s credit facilities, which were recently revised to provide incremental growth capital, says the company.

“The Hertz Board and management team have determined that a comprehensive modification to Hertz's U.S. fleet strategy is necessary to establish a more competitive product position, improve the customer experience, provide greater flexibility for demand fluctuations and better protect against a fluctuating used-car sales cycle," said MacDonald.


  1. Whyme [ November 14, 2014 @ 01:02PM ]

    Really....it's not a mystery.... Hertz went after all the really cheap business to compete with Enterprise... State Farm etc....

  2. Michael [ November 19, 2014 @ 10:21AM ]

    Perhaps Hertz can consider a strictly defined and implemented Incremental Sales program. While I was at Avis Budget, I increased revenue millions of dollars while visiting strategic cites around the USA.

Comment On This Story

Comment: (Max. 10000 characters)  
Please leave blank:
* Please note that every comment is moderated.


Newsletter: Sign up to receive latest news, articles, and much more.

Read the latest

Auto Focus Blog: A blog covering fleets, auto rental and the business of cars

6 Takeaways from the 2018 International Car Rental Show

Technological solutions are finally moving from reality to theory, peer-to-peer platforms are being redefined, China has the biggest room for growth, while Sixt’s U.S. aspirations have only just begun.

The Irony of Customer Service in the Digital Age

Sure, any company would jump at the chance to use technology to reduce labor costs. But it also comes with some big, red, flashing warning lights.

Market Forces Driving Car Rental in 2018

An analysis of the conference calls of Avis Budget Group and Hertz Global Holdings reveal trends and initiatives involving fleet right sizing, pricing, ancillary revenue opportunities, and renting to ride-hailing drivers.

Job Finder: Access Top Talent. Fill Key Positions.