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 modernize the customer experience from browsing to ownership. Previously, HertzCarSales.com only provided vehicle listings, with most transactions occurring at physical retail locations. The new platform will enable customers to secure financing, receive trade-in offers, and finalize purchases online. CEO Gil West emphasized that this move is a critical milestone in making retail the primary channel for car sales. Additionally, Hertz plans to launch a promotional campaign featuring football star Tom Brady to highlight these changes.
Why It's Important?
The expansion of Hertz's online car buying platform is poised to impact the vehicle resale market significantly. By facilitating online transactions, Hertz can potentially improve vehicle resale values and accelerate fleet turnover, which is crucial for rental companies. With a fleet of approximately 560,000 vehicles, optimizing resale prices is vital for Hertz's profitability. The company traditionally sells vehicles through various channels, including direct consumer sales, dealer sales, and wholesale auctions. The enhanced online platform could reduce reliance on auctions, which typically offer lower prices. This strategic shift is part of Hertz's broader turnaround plan following its bankruptcy filing in 2020 due to the pandemic's impact on travel demand.
What's Next?
Hertz's new e-commerce platform is expected to attract more consumers to purchase vehicles directly, potentially increasing competition with traditional car dealerships. The promotional campaign featuring Tom Brady is set to begin, aiming to boost consumer awareness and engagement with the new platform. As Hertz continues its recovery, the company is likely to explore further innovations to enhance profitability and market presence. The partnership with Amazon Autos, announced earlier, may also play a role in expanding Hertz's reach in the preowned vehicle market.
Beyond the Headlines
The shift towards online car sales reflects broader trends in the automotive industry, where digital platforms are increasingly becoming integral to consumer purchasing behavior. This move by Hertz could influence other rental companies to adopt similar strategies, potentially reshaping the industry's approach to vehicle sales. Additionally, the focus on maximizing resale values aligns with Hertz's efforts to optimize its profit and loss statements, highlighting the importance of strategic fleet management in the rental sector.
