Car Cost Inflation Drives Hertz Price Increase

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

Over the weekend of Dec. 19 to Dec. 21, Hertz Global Holdings Inc. announced that it increased U.S. retail prices for all Hertz, Dollar and Thrifty car rentals reserved for pick-up on or after Jan. 1, 2015.

This price increase was driven by fleet depreciation increases, primarily related to residual value declines, says the company.

"Fleet costs are escalating due to declining residual values and, as a result, we have implemented price increases across our car rental brands in the U.S.,” said John Tague, Hertz's chief executive officer and president. “The company is pursuing cost reduction opportunities in addition to its previously announced program to cut expenses $100 million annually, while also increasing investment to improve our customers' rental experience, including refreshing the car rental fleet."

Comments

  1. John [ December 27, 2014 @ 03:18PM ]

    Theres a huge hole in the pockets of Hertz and this is their proverbial needle and thread. I agree its related to their poor/falsified documentation and their operations should be halted until their efforts have produced an accurate report. As one who works for a rental car competitor, I see no evidence to support their claim of "residual values". Fleet costs refers of course to the vehicles themselves, which would be affecting all car rental company's industry wide that return or resale the vehicles to the manufactures, partnered dealers and state auctions.

    On the other hand, it possibly could be an economic trickle down from for example, GM. Who has massed plenty of debt between bail outs and recalls. A drop in manufacture buybacks prices to rental companies would easily affect a rental companies ability to not only rotate fleet, but cuts a chunk of cash from quarterly raw income. At this point, show me a company that is operating on thin ice that wouldn't pass it on to customers. Not to mention the affects of the loss in profit caused by inoperable rental vehicles and the length of time between recall and solution (GM didn't have an ignition replacement for months; they did make a killing on push button start modules Im sure, but rental companies suffered significant losses.)

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