Hertz’s shares surged by 13% after posting a smaller-than-expected loss in the second quarter. The company made a marginal profit of $1 million in earnings before interest, taxes, depreciation, and amortization (EBITDA), beating Wall Street’s expectations. The company lost 34 cents per share on an adjusted basis compared to analysts’ projection of a 42-cent loss.
The company has made several significant strategic improvements in an effort to revitalize its rental business. During the first half of 2025, the company prioritized exchanging older vehicles for newer ones ahead of President Trump’s auto tariffs, which would have significantly increased costs on imported vehicles and lowered depreciation expenses. Eighty percent of the company’s core U.S. rental fleet is less than one year old.
Hertz also focused on reducing their fleet size to better align its rental capacity with consumer demand, and vehicle utilization reached 83%, a year-over-year increase 3%.
Here’s why it matters:
Hertz’s smaller-than-expected loss is a clear indication that its efforts in improving its fleet management, improving utilization rates, and stringent cost control are working.
Hertz’s aggressive replenishment of newer inventory and reduction of EVs reveals where demand is trending. The company’s retreat from Tesla and pivot back to conventional models reflects broader hesitations in the retail and rental sectors about the scalability and service demands of electric vehicles. This could impact wholesale pricing, used car supply, and dealer stocking decisions over the next several quarters.
Additionally, Hertz’s focus on aligning its fleet to match travel demand underscores the importance of aligning inventory with real-time market conditions.
Key takeaways:
- Hertz shares surged after Q2 results beat Wall Street’s expectations
The company made $1 million EBITDA, the first positive result in two years. After reporting the smaller-than-expected loss, the company’s shares jumped 13%. - Shares are up 52% YTD
The company’s shares are up double-digits year to date, largely propped up by Bill Ackman’s Pershing Square Capital acquiring a large stake, anticipating that tariffs will amplify the value of Hertz’s fleet. - Ongoing strategic adjustments improved overall operations
The rental company prioritized replacing older models with newer models in its fleet during the first half of 2025 to beat Trump’s tariffs. Nearly 80% of its core U.S. rental fleet is under a year old. It also reduced its fleet size to better align with current travel demands. - Monthly vehicle depreciation has made massive improvements
Hertz’s monthly depreciation per vehicle dropped to $251, a 58% drop year-over-year. It’s a drastic difference from the staggering $537 the company faced in 2024 when struggling with a failed bet on Tesla EVs. - Still in recovery mode after a failed bet on Tesla EVs
In 2021, Hertz spent $4.2 billion on 100,000 Tesla EVs to add to its fleet. A significant gamble, and one that did not pay off as the vehicles depreciated rapidly, repair costs skyrocketed, and customer requests for EV variants were less common than anticipated. The company quickly began selling off thousands of Teslas in 2024.
