ESTERO, Florida: Hertz Global Holdings new chief executive, Stephen Scherr, said this week that despite rising inflation, he expects Americans’ pent up longing for summer vacations to lead to more strong rental car demand.
At a time when tight vehicle supplies are enabling rental companies to charge record high rates, Hertz, which emerged from bankruptcy last year, beat analysts’ first-quarter expectations for top- and bottom-line growth.
Scherr, a former Goldman Sachs finance chief who became Hertz CEO at the end of February, said strong demand in the second half of the first quarter carried over into April.
In an interview with Reuters, Scherr noted, “You may well see consumptive behavior elevated this summer, inflationary tendencies notwithstanding, because consumers did not have the opportunity to travel due to COVID-19.”
Hertz has struggled to increase inventory levels, as an ongoing shortage of semiconductors hampers vehicle production, but it was moving existing vehicles to the “highest-margin opportunities,” he added.
Tight supply and higher prices also allowed Hertz to increase its total first-quarter revenue per vehicle by 26 percent from last year.
In the three months through March this year, the company reported revenues of $1.8 billion and net income of $426 million. Analysts had expected the company to post averages of $1.7 billion and $375 million, respectively, according to Refinitiv data.
Scherr stressed that Hertz is committed to transitioning to electric vehicles (EV) and aims to partner with all manufacturers to purchase EVs, including Ford and General Motors.
Hertz has also signed deals with Tesla and Polestar to acquire tens of thousands of EVs.
Tesla vehicles were “super well received” by both consumers and Uber ride-hail drivers who can rent them at special rates, Scherr said.