What's Happening?
Hertz has announced a significant update to its online shopping website, allowing customers to complete nearly the entire car buying process online. This development marks a major shift in Hertz's retail strategy, aiming to make retail its primary car selling channel. Previously, HertzCarSales.com only offered vehicle listings, with most transactions occurring at physical retail locations. The new e-commerce platform will enable customers to secure financing, receive trade-in offers, and complete other necessary steps for purchasing a vehicle. CEO Gil West emphasized the modernization of customer service through this seamless online journey from browsing to ownership. Additionally, Hertz plans to launch a promotional campaign featuring football star Tom Brady to highlight these retail changes.
Why It's Important?
The expansion of Hertz's online car buying platform is crucial for improving vehicle resale values and accelerating fleet turnover, which is essential for rental companies. With a fleet of approximately 560,000 vehicles, Hertz aims to maximize resale prices, a significant component of its profit and loss statement. By enhancing its retail presence, Hertz can reduce reliance on wholesale auctions, which offer liquidity but lower prices. This move aligns with Hertz's ongoing turnaround efforts following its 2020 bankruptcy due to the pandemic's impact on travel demand. The company has been focusing on fleet management, revenue optimization, and cost efficiency as part of its recovery strategy.
What's Next?
Hertz's partnership with Amazon Autos, announced in September, will complement its online platform by offering similar functions. This collaboration could potentially impact traditional car dealerships' profit sources. As Hertz continues its recovery, the company is exploring innovative ways to regain profitability, with new vehicle supply stabilizing post-pandemic and demand remaining steady. The upcoming promotional campaign with Tom Brady is expected to boost consumer awareness and engagement with Hertz's updated retail offerings.
Beyond the Headlines
Hertz's strategic shift towards online retail sales reflects broader trends in the automotive industry, where digital platforms are increasingly becoming vital for consumer engagement. This transition may influence other rental companies to adopt similar strategies, potentially reshaping the industry's approach to vehicle sales. The partnership with Amazon Autos also highlights the growing intersection between traditional automotive sales and e-commerce giants, which could lead to further collaborations and innovations in the sector.
