Companies often tout their green initiatives as a way to drum up new business, but the expensive reality of investing in EVs and other technologies isn’t always clear up front. Hertz found that out the hard way, as it aggressively invested in new EVs for its rental fleet a couple of years ago, only to begin selling them off in 2024.
Hertz has decided to pay $168 million to settle 364 individual claims that the company falsely reported its own rental cars as stolen. Criticisms date back to 2015 but the issue became national news right around the time the company was also filing for Chapter 11 bankruptcy in 2020. Hertz has since maintained that any erroneous claims made against customers were the result of a faulty inventory system that’s since been fixed. However, the people that were wrongfully accused of the crime – some of which were held at gunpoint by police and even temporarily imprisoned for a felony offense they didn’t commit – have been seeking restitution in class-action suits.
In 1966, Shelby American joined forces with Hertz for its Rent-a-Racer program. Legend has it that the entire thing started as a way for Carroll Shelby to sell 1,001 modified Ford Mustangs, effectively conning the rental agency into paying for the privileges of advertising his products. But the resulting Shelby GT350H has become a bit of a legend, with the surviving examples consistently going for six figures at auction.
In actuality, Hertz was already offering high-performance vehicles years before Shelby got involved and the pair had previously worked together to offer the Cobra in 1962. Their marriage solidified the company’s efforts to occasionally provide customers with the opportunity to drive something truly glorious to drive. While the Mustang (along with the Corvette) remained a staple for North America, Shelby models wouldn’t return until 2006 delivered a second incarnation of the GT350H, to be followed by the 2016 GT-H. Hertz and Shelby American have confirmed a new partnership — one that has resulted in the 900+ horsepower Mustang Shelby GT500-H.
Hertz customers have issued complaints that the company falsely accused them of stealing rental cars. Numerous renters have made claims that they were stopped by police to be informed that the vehicle they had paid to borrow was reported stolen. Complaints became so prevalent that CBS News launched an investigative report last November to uncover whether individuals were simply lying about their innocence to avoid prosecution or if Hertz was habitually screwing things up.
By December, 191 claims had been filed in federal bankruptcy court on behalf of the people who said they were falsely arrested. But it took another two months for a Delaware bankruptcy court judge to issue a ruling that will require Hertz to make the number of renters it accuses of stealing its cars every year publicly available.
I took a few days off in December for a vacation, flying out to New Mexico just in the nick of time to avoid the rise of the Omicron variant of COVID. I’d need a rental car to get from the airport in El Paso, Texas, to Las Cruces – and to tool around town a bit, maybe.
Being on an automotive journalist’s salary and knowing I’d likely never have more than one passenger at a time, I decided to go the least-expensive route and get a compact – “compact” by the rental-car company’s definition, but subcompact per the EPA.
“Nissan Versa” or similar, the Web site said. Not great, but something I could live with for a few days. I didn’t need a lot of space or comfort.
Tesla shares took a dip on Tuesday after Tesla CEO Elon Musk tweeted that its deal to provide Hertz with 100,000 electric vehicles had not been ratified with the signing of a contract. While this normally means the deal had not been finalized, the language used by Musk almost makes it sound like whatever Hertz had been claiming previously didn’t even matter.
“You’re welcome! If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet,” the CEO said in reference to Tesla’s share price pitching upwards by over 8 percent. “Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics.”
After managing to avoid what appeared to be certain death, Hertz has decided to purchase 100,000 Tesla vehicles before the end of 2022. Considering the firm was filling out Chapter 11 bankruptcy forms this time last year, the estimated $4.2 billion expenditure designed to ensure that 20 percent of its global fleet is electric does feel slightly frivolous. But Hertz says it’s getting out ahead of the curve and is interested in becoming a “mobility company,” rather than a business that just rents people automobiles.
While nobody needs to tell you that the economy isn’t in good health, we should at least hip you to the latest automotive trends relating to the financial purgatory we’re currently living through. Ford sent a memo to dealers last week indicating that it would be removing the minimum FICO requirement for 84-month financing, indicating that the industry may soon normalize auto loans that are even longer than the 72-month whoppers that have grown in popularity over the last several years.
Meanwhile, those needing a vehicle intermittently will find that rental rates have not been declining as hoped. Despite analysts previously suggesting that auto pricing may stabilize through the fall, we now look to be going into the holidays facing familiar high-priced troubles — and there’s really no reason to think that’s going to change after 2022 gets here.
With rental companies coming off a particularly lean 2020, fleet downsizing turned out to be a necessity for many agencies. Unfortunately, demand for rental vehicles has begun to return and some markets have found themselves operating with an insufficient number of cars. The upside to this is the ability to charge exorbitant fees for models nobody wanted to rent in the first place. But businesses can’t cash in on vehicles that didn’t get rented, leaving agencies desperate for new product that’s been backlogged by the auto industry’s semiconductor shortage.
The solution is a novel one, at least for rental companies. Rather than gamble the business on whether or not supply chains normalize before summer, they’ve been prowling auctions and hoovering up used cars in record numbers.
Reeling from the pandemic-born financial crisis, Hertz is unloading some particularly cost-intensive vehicles from its rental fleet. While plenty of these vehicles are old stock it would have had to get rid of eventually, Hertz is limiting fleet turnover this year, recently cancelling roughly 90 percent of new vehicle orders it had on the books for 2020. The company’s also selling some of the special performance vehicles slotted into its lineup every year — and not all of them seem to have accrued the kind of mileage that would normally warrant a sale.
We’ve chronicled the rental agency’s plight for a while now; Hertz seems to be on the brink of declaring bankruptcy, making it a good case study for the perils confronting auto rental groups everywhere. While we don’t think selling a handful of high-horsepower Chevrolets will be anyone’s saving grace, it might help Hertz scrounge up some loose cash — and provide a half-decent opportunity for enthusiasts to procure a bargain project car.
Rental car giant Hertz, which recently struck a deal with creditors amid debt incurred by the coronavirus pandemic, has a new CEO.
Paul Stone, formerly the company’s executive vice president and North American chief retail operations officer, was named to the top spot on Monday. There, he’ll face a full plate, though saving the company will be Job One.
While fleet participation helped Nissan boost its sales volume for years, management feels it hasn’t done the company any favors in terms of profitability. As such, the company says it wants to take the 2020 Sentra out of the rental circuit. If you borrow a vehicle from rental agencies more than never, you’ve probably noticed Nissan’s compact sedan is often the default choice when the supply of Chevrolet Sonics or Toyota Corollas dries up.
Expect less of this moving forward, but be warned it’s not the dream scenario you envisioned. First off, there will undoubtedly be leftover 2019 models on rental lots for some time. Secondly, Nissan improved the 2020 Sentra to a point where you might actually prefer it. The manufacturer made no small effort effort to shore up the sedan’s ride quality, handling, comfort, tech and visual aesthetics for the new generation — succeeding rather well, according to our own Tim Healey. It also has a new 2.0-liter motor offering superior vigor versus its anemic 1.8-liter predecessor. With more on offer, Nissan figured it was a better idea to try it out on customers first, rather than assuming its rightful place is in a rental fleet.
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- MrIcky Worrying about mileage is for poors.
- ToolGuy A 'true' Volvo (pre Ford Motor Company). I would buy this and drive it for 3 years until I can get one of them 'Chinese' EV things. But I'm offering $1,850 against your $3,700 because you couldn't be bothered to pull it outside for pictures. 😉 And I will stick close to home with this one -- no road trips.In related news (Relevant and Connected!!): My new dishwasher is Swedish -- little outfit called Frigidaire, you may have heard of them. (On order, should be here in March)
- CKNSLS Sierra SLT Let me get this straight-It's OK for GM to make cars in China and ship them here-under a Buick name. But for the Chinese to directly do it is not OK.If the Big 3 had not a deserted sedans/low end of the market they wouldn't have anything to worry about.Yea...makes perfect sense.
- Analoggrotto This must look great in your Tellurides
- Dukeisduke Meanwhile in the EU, they're inviting Chinese manufacturers to build assembly plants there, especially in Italy. FIAT cut back production in Italy from one million vehicles a year, to 750,000, so the Italian government wants the Chinese plants for the jobs they'll create. They've contacted BYD about building a plant, but so far, BYD has only committed to building a plant in Hungary. A second plant in the EU will depend on demand for vehicles.