Skift Take
It is indeed fascinating to hear how many operational tech changes are coming into the car rental business, much as it has been a late digital adopter compared to other sectors of travel.
Hertz has been a remarkable turnaround story of the pandemic, during which it went into a massive bankruptcy, came out of it under an investor group led by Knighthead Capital and Certares, and then went public a year ago.
It hired the former chief financial officer of Goldman Sachs earlier this year, Stephen Scherr, to turn around the business, and has been posting record earnings on the backs of huge demand — and high prices — for rental cars as part of the big travel rebound ongoing since last year.
I met Scherr in Riyadh last week at the WTTC Global Summit and talked about the big picture opportunities and challenges he is navigating the company through. For him, all the larger tech and consumer trends are playing in favor of his business and the overall car rentals sector. An edited version of my interview with him, below.
Ali: What drew you to join Hertz, a company that went through bankruptcy during the pandemic?
Scherr: It is both what drew me to the opportunity and it is kind of the mission we're on, which is I'm running a rental car company at a moment of enormous change in the automotive space generally and in the whole sort of proposition of mobility. And both of those sort of circumstances and trends are weighing heavily in terms of how we want to run Hertz as a business. On the automotive side, obviously we are moving in a very big way toward electric vehicles and Hertz has taken a rather aggressive strategic stance.
Ali: What are the EV numbers that you have today?
Scherr: So we have committed ourselves to purchase 100,000 Teslas, 65,000 Polestars, and we announced that over the next five years, we would buy 175,000 General Motors electric vehicles. It's kind of across their models. And we'll take delivery on those beginning model year 2023.
Ali: What would that constitute as a percent of the fleet in coming years?
Scherr: Well, our objective is that we will have 25 percent of our fleet electric by the end of 2024. The economic dynamics of this are themselves changing quite a bit, meaning Tesla was and is a more expensive automobile. [General Motors] is going to manufacture across a range of models. Everything from a compact sedan all the way through to a very expensive [sports utility vehicle].
Ali: Right.
Scherr: Cadillac Escalade and Chevy Suburban and so forth. That diversity will be of appeal to our customers and the different pri