The Hertz Corporation
|Industry||Car rental and leasing|
|Founded||1918Chicago, Illinois, U.S.in|
|Founder||Walter L. Jacobs|
Number of locations
|12,000 corporate and franchisee between Hertz, Dollar, and Thrifty (as of 2020)|
|Paul Stone (President and CEO)|
|Revenue||US$5.258 billion (2020)|
|US$−1.065 billion (2020)|
|US$−1.714 billion (2020)|
|Total assets||US$16.908 billion (2020)|
|Total equity||US$93 million (2020)|
|Owner||Hertz Global Holdings, Inc.|
Number of employees
|Footnotes / references|
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., is an American car rental company based in Estero, Florida, that operates approximately 12,000 corporate and franchisee locations, both domestically and internationally. As one of the largest worldwide vehicle rental companies by sales, locations, and fleet size, Hertz operates in 160 countries in North America, Europe, Latin America, Africa, Asia, Australia, the Caribbean, the Middle East and New Zealand. The Hertz Corporation also owns Firefly Car Rental, and the former Dollar Thrifty Automotive Group, which is now separated into the Thrifty Car Rental and Dollar Rent A Car brands.
Hertz Global Holdings, the parent company of The Hertz Corporation, was ranked 326th in the 2020 Fortune 500 list. The company filed for bankruptcy on May 22, 2020, citing a sharp decline in revenue and future bookings caused by the COVID-19 pandemic. As of December 31, 2020, the company had revenues of US$5.26 billion, assets of US$16.9 billion, and 24,000 employees. As of July 1, 2021 the company is no longer in Chapter 11 bankruptcy.
The company's early years
The Hertz Corporation, originally known as Rent-a-Car Inc., was founded by Chicago, Illinois native Walter L. Jacobs in 1918. This small car rental operation began with a dozen Model T Ford cars. Within five years, Jacobs' fleet expanded to 600 vehicles—generating annual revenues of approximately US$1 million. John D. Hertz, owner of Yellow Truck and Coach Manufacturing Company, developed an interest in the brand, leading to him purchasing the company in 1923. It was then renamed to Hertz Drive-Ur-Self System. Jacobs continued to serve as president and chief operating officer of Hertz Drive-Ur-Self System until 1961.
After three years of ownership, John Hertz sold the rental car brand to General Motors Corporation in 1926. GM purchased the rest of Yellow Truck and Coach Manufacturing Company in 1943. Under the ownership of General Motors, the company released the first rental car charge card in 1926, opened its first rental car location at Chicago's Midway Airport in 1932, and introduced the first one-way rental plan in 1933. Hertz Drive-Ur-Self System expanded services to Canada in 1938 and Europe (France) in 1950.
Development of the corporation
John Hertz repurchased the brand from General Motors in 1953 through his other company, The Omnibus Corporation, which he renamed to The Hertz Corporation. In 1954, its stock began trading on the New York Stock Exchange, and it purchased a New York-based truck leasing company, Metropolitan Distributors, including a fleet of 4,000 trucks. This acquisition increased The Hertz Corporation's fleet to 15,500 trucks and 12,900 passenger cars. During the General Motors ownership, the company had sold many local Hertz franchises to independent business entities. With the financial backing of investment bankers Lehman Brothers, led by Lehman partner and Hertz director, Frank J. Manheim, Hertz began a buyback program for the franchises in the US, then expanded globally. Manheim predicted the global growth and devised the strategy which made “Hertz” a household name and led to dynamic growth in the company's market capitalization from $7 million in 1953 to $100 million in 1965.
The company expanded to South America in 1961. In 1967, The Hertz Corporation became a subsidiary of Radio Corporation of America. In 1985, the car rental company was sold to UAL Corporation, later known as Allegis Corporation, for a cash deal of US$587.5 million. This acquisition expanded Hertz's vehicle renting and leasing, with nearly 400,000 cars and trucks in 120 countries across the globe.
In the summer of 1987, Allegis Corporation chairman and president Frank A. Olson announced the company would be selling Hertz due to internal changes. Park Ridge Corporation, which was owned and operated under Ford Motor Company, purchased Hertz in October 1987 for US$1.3 billion, and Hertz relocated its headquarters from Midtown Manhattan to Park Ridge, New Jersey in 1988.
In 2002, Hertz became the first international car rental company to open in China. In 2013, Hertz began partnering with China's largest car rental company, China Auto Rental. In 2016, it reduced its ownership stake but announced a continuing commercial relationship through 2023.
By the second quarter of 2005, Hertz produced about ten percent of Ford's overall pre-tax profit. However, after 18 years of ownership, the Ford Motor Company announced it would be selling the Hertz brand with the intent to focus more on building Ford cars and trucks. Private equity firms Clayton, Dubilier & Rice, The Carlyle Group, and Merrill Lynch Global Private Equity agreed to purchase all shares of common stock in Hertz for an estimated US$15 billion, including debt, and the business itself for US$5.6 billion in 2005.
The Clayton, Dubilier & Rice consortium took Hertz Global Holdings public again on the New York Stock Exchange in November 2006, and Hertz began to expand through Europe.
Hertz launched subbrand "Simply Wheelz" in September 2007 for economy-minded and leisure-market audiences. By 2008, the service expanded to airports in California, Florida, and the McCarran International Airport in Las Vegas, Nevada. Once an online reservation was made, customers were able to choose one of six types of vehicles at self-service rental kiosks. Simply Wheelz was rebranded as Advantage Rent-a-Car in the fall of 2009.
Dollar Thrifty and Advantage transactions
In November 2012, Hertz Global Holdings Chairman and CEO Mark P. Frissora announced the company's purchase of Dollar Thrifty Automotive Group, a U.S.-based car rental brand with headquarters in Tulsa, Oklahoma, for US$2.3 billion. The business transaction included Hertz paying $87.50 per share of the Dollar Thrifty stock. The deal was finalized on November 19, 2012, and resulted in a combined 10,400 locations in approximately 150 countries. Before the merge, Dollar Thrifty was the fourth-largest car rental company.
In December 2012, Hertz announced it would sell its Advantage Rent a Car unit to Franchise Services of North America and Macquarie Capital after the acquisition of Dollar Thrifty Automotive Group was finalized.
Modern corporate changes
In May 2013, Frissora and Florida Governor Rick Scott announced Hertz Global Holdings would relocate their worldwide headquarters from Park Ridge, New Jersey to Estero, Florida. Relocation to Southwest Florida was influenced by the state's travel and tourism industry, proximity to Orlando and Miami, to condense corporate offices, and to increase efficiency of Hertz Global brands. A temporary office building in Naples, Florida housed 640 employees until construction of a new facility was completed in 2015.
John P. Tague replaced Frissora as chief executive officer and president of The Hertz Corporation in November 2014.
As a result of the COVID-19 pandemic, on April 30, 2020, Hertz announced that it had missed lease payments on its fleet and was seeking support of its lenders, including activist investor Carl Icahn, in an attempt to avoid bankruptcy. Marinello resigned as CEO on May 18, 2020, and Hertz announced that Paul Stone would be the new president and chief executive. Stone previously served as Hertz's executive vice president and chief retail operations officer for North America. On May 22, 2020, the Wall Street Journal reported that Hertz was preparing to file for bankruptcy because it did not reach an agreement with top lenders. That same day, the company filed for Chapter 11 bankruptcy. Carl Icahn held 39% of Hertz's shares when it filed for bankruptcy on May 22, 2020, and he controlled three board seats. He invested a total of $2.3 billion into Hertz shares from 2014 to 2020.
Hertz financed itself mostly by taking out loans secured by its fleet of cars, and if the cars fell in value, Hertz's lenders had the right to demand an immediate payment, reducing the amount of the loan, so they were still comfortably covered by the cars’ now-lower value. Because of the crisis, used-car values and sales volumes fell right as Hertz lost most of its customers. The bankruptcy filing started a 60-day clock, during which Hertz's secured lenders must wait before they can foreclose on the 400,000 U.S. cars that were financed through such arrangements.
Despite the bankruptcy filing, Hertz announced on June 11 that it is seeking to raise up to $1 billion in new equity (with disclaimers that there is a "risk that the common stock could ultimately be worthless"). The Wall Street Journal characterized the potential stock sale as a "seemingly unprecedented move for a large bankrupt company eager to capitalize on market anomalies," as its stock price rose nearly 1000% to $5.50 a share, from a low of 59 cents after its bankruptcy filing. Hertz's stock has been heavily traded by retail investors, becoming one of the most-traded stocks in trading apps such as Robinhood. Hertz sold $29 million in stock before the Securities Exchange Commission halted further sales. The stock was delisted from the New York Stock Exchange in October 2020.
On July 1, 2021, Hertz emerged from Chapter 11 Bankruptcy after a very successful rally and backing by new investors to eliminate debt and pose for better business outlook ahead of the rest of the summer. Hertz since changed ticker symbol from HTZGQ to HTZZ as a part of this change.
In 2000, Hertz introduced SiriusXM Satellite Radio to its North America rental fleet.
In 2007, the company began testing hourly car rentals at three locations in New York City. It launched a global carsharing service under the name Connect by Hertz in December 2008, serving customers who paid a fee to rent cars by the hour in Park Ridge, New York, Orlando, London, Paris, and Sydney. Later branded as Hertz on Demand and Hertz 24/7, operation in the United States ceased in September 2015.
In 2009, it began testing a photo system to record damage to its rental cars.
It introduced ExpressRent kiosks at various rental locations in November 2011. This was the first introduction of large-scale car rental kiosks in the United States that used a live agent through video chat.
Car rental locations and operation
Hertz has approximately 12,000 corporate and franchisee locations in 160 countries throughout North America, Europe, Latin America, Africa, Asia, Australia, the Caribbean, the Middle East and New Zealand.
History of franchising
Wilford Gwilliam of Overland West purchased a portion of Hertz franchise in 1941. Overland West is the largest Hertz franchise licensee in North America, operating 27 car rental and four car sales locations in eight states. Gwilliam sold it to Devere J. Sparrow, who led the organization until selling it to his son-in-law, Jerry H. Petersen, in 1976. As the current owner, president and CEO, Petersen oversees franchises and employees.
The Hertz rental car fleet has consisted of a variety of vehicle manufacturers, ranging from BYD, Mercedes, Infiniti, Cadillac, Land Rover, BMW, Porsche, Jaguar, Mazda, Volvo, Toyota, Jeep, and Lincoln, along with various others. By December 2012, the company had over 490,000 cars in the United States. As of 2014, 78 percent of Hertz's fleet includes vehicles that reach 28 miles per gallon or more on the highway.
In 1966, Hertz engaged racing and automotive designer Carroll Shelby to develop an exclusive version of his modified Ford Mustang. The objective was to attract more customers to Hertz and the Hertz fleet would tempt car renters to buy a Mustang or a Shelby-Mustang. One thousand GT350H Mustangs were built as rental cars, although urban legend also maintains that many were missing original engines when returned. The "Rent-a-Racer" program was available in selected locations during the late 1960s for a limited time. The fleet has included Corvettes, Jaguar XK-Es, and AMC AMXs.
In 2006, Hertz partnered with Shelby to rent specially-modified Ford Mustang GT-H Coupes as a tribute to the original 1966 Ford Mustang Shelby GT350-H. These 500 cars in 2006 were followed by convertibles in 2007. In 2008, Hertz began to rent modified Chevrolet Corvette (C6) "ZH-Z" Coupes, followed by convertibles in 2009.
Hertz reintroduced the program in 2016, and includes vehicles such as Hendrick Motorsports-modified Chevrolet Corvette (C7) Stingray Z/06 and Chevrolet Camaro SS and ZL-1, and a Shelby-modified Ford Mustang GT.
The Green Collection
Hertz launched its Green Collection of rental cars in September 2006. This fleet of environmentally friendly vehicles has included the Toyota Prius, Ford Fusion, Buick LaCrosse, Toyota Camry, and Hyundai Sonata. In the US vehicles within this group feature Environmental Protection Agency (EPA) highway fuel efficiency ratings of 28 miles per gallon-highway. Different models and different standards apply in other markets. The Green Collection was introduced in Singapore in 2014.
Heavy equipment rentals
Hertz opened a heavy equipment rental division in 1965, the Hertz Equipment Rental Corporation, with its first location in Houston, Texas and headquarters in Park Ridge, New Jersey. HERC became an independently publicly traded company called Herc Rentals Inc. on July 1, 2016. Herc Rentals wasn't affected by its former parent's bankruptcy on May 22, 2020.
Let Hertz Put You in the Driver's Seat
In 1959, the advertising firm of Norman, Craig & Kummel (NCK) was selected as the new advertising agency for Hertz. NCK developed the slogan "Hertz puts you in the driver's seat", which was first used commercially in September 1959. NCK changed the wording to "Let Hertz put you in the driver's seat" by October 1959. Popular a cappella quartet The Hi-Lo's sang the Hertz song for the commercials. Hertz used the line in the early 1960s in print, signs, and television. The series is listed as number 65 in the top 100 advertising campaigns of the 20th century by Advertising Age magazine.
Former football player O. J. Simpson appeared as a spokesperson in Hertz ads. Simpson's place in advertising is said to have sparked African-American athletes being featured in film and television. One spot from the mid-1970s showed Simpson, at that point an American football player, running through an airport terminal, dressed in business attire, leaping over rows of seats to get to his Hertz rental car. A woman yelled, "Go, O. J., Go!" The tagline of the ad, as spoken by Simpson, was "Hertz, the superstar in rent-a-car". Through the 1980s and 1990s, Simpson appeared with golfer Arnold Palmer and actress Jamie Lee Curtis. After O.J. Simpson's Ford Bronco chase and his murder trial, Hertz cut all ties to him.
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Urban legend also maintains that more than a few were returned to the rental lot with the fresh 289 Hi-Po V-8 having been replaced by a tired, garden-variety, low- performance Mustang or Falcon engine after a weekend engine swap. Few Hertz renters will confirm or deny.
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