Hertz Global Holdings Inc. said revenue rose 4 percent in the quarter to $2.4 billion as the company managed through a period of weaker used-vehicle prices in the U.S.
The Estero, Florida-based company said net income fell 56 percent to $227 million in comparison to a quarter a year ago when both used-car prices were at record highs and prices at the rental counter were also high. Adjusted earnings per share were 72 cents, below the $1.22 of a year ago.
Hertz said travel demand rose in the quarter as the company reported an increase in transactions and kept more of its cars rented out to travelers, which helped overcome a jump in depreciation costs that nearly tripled from a year ago to $195 a car per month.
The company is returning toward a more stable period, which means stronger travel activity but also lower values for the cars in its fleet. Rental companies and car dealers have been wrestling with a softening of the used car market, which has tumbled from near-record pricing a year ago and declined 11 percent again in mid-July. Hertz has been working to keep its cars rented out at a higher rate to sustain profits.
“We’re running our fleet very hot and we are very efficient in how we use our assets,” said Stephen Scherr, CEO of Hertz, in an interview.
Hertz had an average 82 percent of its fleet out for rental during the second quarter, up three percentage points from a year ago. Given the rebound in travel, Scherr said the company should be able to get that rate closer to 90 percent.
The company’s share price fell 7.5 percent to $16.59 as of 12:18 p.m. in New York.
The second quarter of 2022 makes for a tough comparison with business this year. Rental companies, including Hertz, were selling off cars to take advantage of the record pricing in the used-vehicle market, Scherr said. That kept depreciation costs anomalously low, and in some cases yielded rare profits. The vehicle sales also created a shortage of cars to rent, which pushed up pricing for travelers at the counter.
The result, Scherr said, is that the current quarter saw both depreciation rise and rental pricing fall. Hertz charged an average of $61 a day, down $7 from a year ago but still about $12 more than the industry had generally charged before the pandemic.
In recent quarters, Hertz has enjoyed a rebound toward pre-pandemic levels. Scherr said there is still room for recovery because corporate and inbound international travel have not fully returned to historic levels.
