Hertz Gets Boost From Tech Investments, Travel Rebound

As Hertz Global Holdings continues transitioning its fleet of Hertz, Dollar and Thrifty rental cars to connected cars, it’s learning that the technology is delivering a wide range of benefits.

During its quarterly earnings call Thursday (July 28), the company reported that 75% of its fleet in the Americas — 285,000 vehicles — is now connected, and that it expects 100% to be connected by the end of the year.

“As an example of technology investment benefiting financial performance, we are making progress with telematics,” Hertz CEO Stephen Scherr said during the call.

With its telematics-equipped cars, the company has realized financial benefit from higher fleet uptime, improved damage monitoring, more accurate fuel measurements, and reduced theft and bad debt.

“By example, repossession recovery times are reduced by 50% on connected vehicles,” Scherr said. “At [a revenue per unit] of more than $1,600 per month, that time savings matters.”

Cars in the Cloud

In an earlier earnings call, a Hertz executive explained that data from connected cars enables the company to see information like the location of the car, the charge level of its battery and any triggering of its engine service indicator.

Read more: Hertz Expands Investments in the ‘Modern Mobility Ecosystem’

“As we mature the program, we will add more features to leverage telematics data to improve our inventory management and planning practices,” Scherr said during the Thursday call.

Hertz is pursuing digitization elsewhere, as well. The company reported that pricing and fleet management engines are under development to drive efficiency and improved return on assets (ROA). It’s also collaborating with Amazon Web Services (AWS) to modernize and digitize key elements of its mobility platform.

“As we progress our move to the cloud over the next 18 to 24 months, we will operate more efficiently and realize very tangible cost reduction as it relates to expenses associated with our legacy platforms and physical data centers,” Scherr said.

Summer Surge

As the summer travel season picks up, car rentals are picking up as well. Hertz reported it achieved fleet utilization of just under 80% in the quarter, which was five points higher than in the first quarter.

Corporate business during the quarter was back to about 70% of pre-pandemic levels, up from the 60% of pre-pandemic levels it was at in the previous quarter. International inbound customer demand was at about 40% of the level it was at in the same quarter in 2019, up modestly from the previous quarter in 2022.

“Demand for our services remains elevated, as each of leisure, corporate and ridesharing continued to demonstrate improvement,” Scherr said.

Addressing the macroeconomic situation and its effect on the demand for rental cars, Scherr said the travel trends relating to the recovery from COVID-19 are prevailing over the risk of an economic downturn.

“In all, we remain confident in the fundamentals of our business,” Scherr said. “That said, like all consumer businesses, we are attuned to external indicators of future economic activity, particularly when they don’t comport with what we are currently seeing in our business.”