Corporate rental car demand continued to improve in the first quarter, and corporate clients are renewing deals "often" at higher prices, Hertz Global Holdings executives said Thursday during an earnings call.
"We're seeing strength in leisure and strength in corporate, where renewals continue and often at [a] higher negotiated price," Hertz CEO Stephen Scherr said.
First-quarter corporate revenue in the Americas was about 80 percent of pre-pandemic levels, chief accounting officer and interim CFO Alexandra Brooks said, and has recovered to about 75 percent in international markets.
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Scherr said Hertz, like many other travel suppliers, is seeing the effects of growing blended demand, which he called good for the company and the sector. "We see it play forward in the context of corporate customers that are asking us about split billing, knowing that an employee may be on a trip and the trip may be one part business and one part leisure. I think that's a net benefit for us and will continue to be," he said. "I see no particular reason for it to fall off."
Electric Vehicle Update
Hertz at the end of the first quarter had about 50,000 electric vehicles in its fleet, about 10 percent of its total cars, according to Scherr. The company has set a goal of increasing that percentage to 25 percent by the end of 2024, and in the first quarter began taking delivery of GM electric vehicles, joining Tesla and Polestaras EV options in Hertz's fleet.
Hertz has partnered with BP to develop a network of charging stations to meet the demand for EVs. "We need to make sure that charging, both on our airport locations and elsewhere, is developing. And I'm quite confident that we are seeing that develop," Scherr said Thursday.
Hertz forecasts nearly 2 million EV rentals in 2023, approximately five times the number of 2022 rentals, Scherr said.
Hertz Q1 Metrics
Hertz reported $2 billion in first-quarter revenue, up 13 percent year over year. Americas revenue increased 11 percent to $1.7 billion, while international revenue increased 25 percent to $317 million.
Hertz's first-quarter net income was $126 million, compared with $403 million one year prior.
The company reported more than 483,000 rentable vehicles at the end of the first quarter, up 6 percent year over year. Vehicle utilization was 77 percent, up from 75 percent in Q1 2022, while total revenue per transaction day increased 3 percent to $60.48.
Hertz in April has seen "several" days with post-pandemic record-high vehicle rental levels, according to Brooks.
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