Hertz Global Holdings Inc. announced that it will be selling approximately 20,000 electric vehicles (EVs) from its fleet, representing about one-third of the total vehicles. This strategic move is an effort to align supply with the anticipated demand for EVs. Additionally, by reducing the number of low-margin rentals and minimizing damage expenses associated with EVs, Hertz aims to better balance its operations.
In a regulatory filing, Hertz revealed that collision and damages costs for EVs remained high during the fourth quarter. As a result, the company expects to incur charges amounting to approximately $245 million in the same period. It is important to note that these charges will be additional to the regular depreciation costs incurred in managing their fleet.
While Hertz intends to continue offering EV rentals, the focus will now shift towards enhancing profitability. To achieve this, Hertz plans to invest in expanding charging station infrastructure and fostering stronger relationships with EV manufacturers. This will enable the company to improve access to more cost-effective parts and labor.
Looking ahead, Hertz aims to actively manage the overall size of its EV fleet and distribute the vehicles strategically among different customer segments. This includes sectors such as leisure, corporate, government, and rideshare.
Stay tuned for Hertz's innovative approach to meeting evolving customer demands and driving profitability within the electric vehicle market.
Hertz to Reinvest in Internal Combustion Engine Vehicles, Expects Improved Financial Results
Hertz, the renowned car rental company, has revealed its plans to reinvest in additional internal combustion engine vehicles. This move is expected to lead to an improvement in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) throughout 2024. By 2025, once all the vehicles in the plan have been sold, Hertz anticipates even greater advancements.
According to the company's filing, this investment is projected to benefit Hertz's financial results through higher revenue per day and reduced depreciation and operating expenses associated with its remaining fleet. The filing further highlights that this action will result in incremental free cash flow generation amounting to approximately $250 million to $300 million over the combined period of 2024 and 2025.
Despite the positive outlook for Hertz, its adjusted EBITDA for the near future is expected to be adversely impacted by the sales plan for electric vehicles. A loss of $120 million to $130 million is anticipated in this area.
Although Hertz's stock (HTZ, -2.30%) saw a slight increase premarket, it has experienced a significant decline of 44% over the past 12 months. Meanwhile, the S&P 500 (SPX x) has witnessed a gain of 20.5% during the same period.
PREVIOUS POST
