Hertz sees rental demand driving back to pre-pandemic levels, promotes key partnerships
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Hertz Global Holdings (NASDAQ:HTZ) sees the summer season as the key inflection point for car rental demand, pushing back to levels last seen in 2019.
The car rental company offered the bullish comments on demand dynamics after posting a beat on top and bottom lines for its first quarter earnings. The company came in above EPS estimates by a penny while securing a 40.3% surge in revenue from the year prior to $1.81 billion, beating estimates by $50 million. The earnings release added that the beat was driven largely by a late in the first quarter surge in rentals, with momentum only building into April.
âLooking ahead, we do not see demand for our services lessening anytime soon. And in fact, all indications point to an extremely busy summer,â CEO Stephen Scherr told analysts in a Wednesday evening earnings call. âThis, coupled with our high operating leverage and attention to the risks of supply chain and cost control gives me confidence that we are well positioned for the next quarter and the balance of the year.
Shares gained about 1% shortly before Thursdayâs open on the brightened summer forecast.
That said, the company noted that inflationary impacts, particularly in used car prices, remain a problem.
âLike others in the industry, we are experiencing the impact of constraints on the supply of new vehicles as well as certain inflationary cost pressures,â Scherr explained. âIt remains difficult to source a fleet to meet demand, and this dynamic may well persist into 2023.â
He added that the demand dynamics that are fomenting his optimistic forecast are also difficult to manage as demand for car rentals outstrips supply. Scherr noted that this setup is necessitating price increases and programs to keep cars in the existing fleet longer while opportunistically purchasing low-mileage used autos. 
âAs our cars age, we are taking care to weigh elevated used car prices against potential rental earnings and time our dispositions to maximize asset returns,â he added. âNotwithstanding strong top line performance, now is the time to get prepared for as and when market conditions turn.â
Elsewhere, the company touted its partnerships with Uber (UBER), Polestar, and Tesla (TSLA) for electric vehicle rentals as facilitating strong demand. The much-talked-about Tesla (TSLA) partnership is expected to expand to 40 markets by the close of 2022, per the release. 
Perhaps less promising is the companyâs alliance with Carvana (CVNA) to sell used vehicles. While the initiative alongside the online auto retailer was noted as âearnings accretive for Hertz,â the financial woes at Carvana (CVNA) could quickly curtail that prospect.
Read more on Carvanaâs (CVNA) latest issues in financing its audacious acquisition aims.