Hertz profits boost despite drop in US used-car prices

Hertz earnings surpassed analysts’ consensus estimates as lower used-car prices helped pull down profits, which declined 45% from the year-earlier period.

Hertz Global is seeing a rebound in corporate and leisure travel toward pre-pandemic levels, even as profits have been pinched by lower used-car prices.

Hertz earnings surpassed analysts’ consensus estimates as lower used-car prices helped pull down profits, which declined 45% from the year-earlier period.

With used-car prices falling sharply in December, fourth-quarter depreciation costs in the US returned to a historically normal level of $278 per car every month in the quarter, well down from this time a year ago. Hertz said its cars depreciated just $26 a month in the last quarter of 2021, reflecting unusually high demand and prices for used vehicles.

Chief executive Stephen Scherr said used-car prices have started to stabilise in January. “We saw a very precipitous decline over much of the second half of 2022, coming off of very elevated prices,” Mr Scherr said in an interview. 

“Over the last four or five weeks, prices had really reversed course meaning not only had it stabilised but used-car prices are coming back up off that precipitous decline,” he said. 

While used-car prices have come off peak levels, their gradual decline helped Hertz record net income for the full year of $2.1bn (€1.9bn). 

Mr Scherr said he expects US used-car prices to stabilise this year. While they’re unlikely to retest recent records, he said they will remain firm enough for Hertz to profit from selling them through its own retail operations and to Carvana. It’s also growing its business of renting cars to drivers for Uber, he said.

Bloomberg