Though lacking in specifics, Hertz CEO Stephen Scherr said during a Thursday earnings call that corporate volume and revenue continued to grow in the third quarter.
Scherr also noted that fixed rate segments, like corporate and the insurance replacement business, are dilutive to headline revenue per day, however “given better intraweek utilization for corporate, and longer length of keep on insurance replacement and therefore lower cost, they are each important to our total business mix.”
RPD for the North American leisure channel was up more than 6 percent versus the second quarter, excluding the dilutive impact of electric vehicles. RPD in Hertz’s fixed rate North American businesses was roughly flat sequentially and “drove the systemwide number lower to plus 2 percent,” Scherr said.
Hertz reported record third-quarter revenue of $2.7 billion, up 8 percent year over year and 11 percent sequentially. It was driven by strong demand in leisure and rideshare channels, Scherr said.
Net income was $629 million, up from $577 million in Q3 2022. Revenue increased 6 percent in the Americas and 17 percent internationally, said CFO Alexandra Brooks. Pricing also grew 2 percent month over month in the Americas and 3 percent for international, though it was down 8 percent in North America versus Q3 2022 and 6 percent elsewhere “compared to exceptionally strong rates in Q3 2022.” The average number of rentable vehicles was more than 562,000, up 11 percent year over year.
Scherr also commented on the higher collision and damage repairs on electric vehicles. “While conventional maintenance on electric vehicles remained lower relative to comparable ICE vehicles in Q3, higher collision and damage reports on EVs continued to weigh on our results and negatively impacted EBITDA,” he said.
“For context, collision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle. Second, where a car is salvaged, we must crystallize at once any difference between our carrying value and the market value of that car,” he added. “The MSRP declines in EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower as compared to last year, such that a salvage creates a larger loss and therefore greater burden.”
Hertz during the next several quarters plans to move an increasing number of current EVs into its rideshare fleet, Scherr said. However, corporate and government demand for EVs, “which is manifesting quickly as these customers seek to satisfy their own sustainability objectives,” means early engagement is “sticky,” and the company is seeing EV demand growth in both segments.
