Rental company Hertz said Tuesday it is updating its online shopping website to allow customers to secure financing, get a trade-in offer and do just about everything else a buyer would need to purchase a vehicle.
The move is a significant step for Hertz’s online retail presence. Previously, the company’s HertzCarSales.com website had only offered listings of vehicles. Most of the purchasing process happened at Hertz’s retail locations, of which there are 45 in the United States.
“Our new e-commerce platform marks a major step forward in modernizing how we serve our customers with a seamless journey from browsing to ownership,” said CEO Gil West in a release shared with CNBC. “This also marks a critical milestone in executing our strategy to make retail our primary car selling channel.”
Hertz is also planning a splashy new campaign with football star Tom Brady to promote the retail changes, starting Wednesday. Brady has been a spokesman since March.
The changes could help improve vehicle resale values and allow Hertz to speed up its fleet turnover, which is key for rental companies. It has a fleet of about 560,000 vehicles, according to its second-quarter filing.
The company offloads about half of its fleet in any given year, according to Deutsche Bank analyst Chris Woronka. As of September, about 80% of its fleet was less than a year old.
“It is important for them to maximize the price that they achieve on the resale, because that is a pretty important part of their P&L” Woronka said, referring to the company’s “profit and loss” or income statement.
Rental companies funnel a portion of their cars to wholesale auctions, which offer great liquidity, but fetch lower prices than retail, Woronka said. Less than 10% of Hertz’s fleet goes to auction, according to the company. Woronka estimates it’s more like 15% to 20% for its competitors.
Rental companies also sell vehicles direct to dealers. But Hertz’s biggest resale channel is consumers, the company said. Apart from its physical locations, the company lists vehicles on platforms such as Autotrader, sells vehicles through Carvana, and has a Rent2Buy program.
In September, Hertz said it would also sell preowned vehicles through Amazon Autos, which offers a lot of the same functions that the rental company is now offering on its own website. Auto industry analysts previously said the Hertz–Amazon partnership could could cut into a historical source of profit for car dealerships.
Meanwhile, Hertz is in the middle of a turnaround. The company filed for bankruptcy in 2020 as travel all but halted during the coronavirus pandemic, drying up demand for rental cars. It relisted in 2021, and shares fell nearly 10% on the first day of trading.
Hertz last year introduced a “Back-to-Basics Roadmap” turnaround plan focused on fleet management, revenue optimization and cost efficiency.
The past several months have been brighter. The company said its second-quarter earnings results were its best in nearly two years.
“They’re still fairly early innings in their their recovery,” Woronka said. New vehicle supply has returned after pandemic-era shutdowns and shortages, and demand is stable, he added.
“They’re really kind of looking for innovative ways to take another leg back toward profitability,” he said.
Watch the video to learn more about Hertz.
