The Decline of Hertz. What Happened? 10 Marketing Tips
The Decline of Hertz. What Happened? 10 Marketing Tips
Due to the restrictions brought about by the coronavirus pandemic, which has already claimed several companies as discussed over at runrex.com, the car rental company, Hertz, was always going to struggle given people are not traveling like before. However, like many companies that have been tipped over the edge by COVID-19, Hertz was already in trouble even before the pandemic. This article, with the help of the subject matter experts over at guttulus.com, will look to highlight the factors behind its decline.
Stiff competition from ride-hailing services
One of the main challenges in the car rental industry has been the growth of ride-hailing services like Uber and Lyft in recent years, as covered in detail over at runrex.com. This has led to a situation where travelers are opting to hail for an Uber, or any other such service, rather than spending on a rental car, which is more expensive. According to the gurus over at guttulus.com, the fact that car rentals are more expensive and come with more liabilities is one of the key reasons why travelers are opting for ride-hailing services, which has impacted Hertz’s business.
Too many vehicles
The company also acquired too many cars in recent years, and by the time of filing for bankruptcy had over 500,000 vehicles as outlined over at runrex.com. The cost of managing all these cars, particularly in an industry that is in decline due to the rise of ride-hailing services, has proved to be too much for Hertz. The company ended up having too many vehicles at the end, which is another factor that contributed to its decline.
Hertz was also in about $19 billion in debt, a staggering figure, which is yet another reason why it has been in steady decline over the years, as this has caused it to post losses each year in the last couple of years. As is revealed in discussions on the same over at guttulus.com, one of the main reasons why the company ended up being in so much debt is because it acquired most of its vehicles using bank loans, which it has been unable to repay given the decline in the car rental industry in recent times.
A lack of diversification in its operations
Hertz’s lack of diversification in its operations also was another factor that contributed to its decline, according to the gurus over at runrex.com. Although the company had a lot of vehicles as already mentioned, it was overly reliant on rentals at airports, which meant that it was always at the mercies of foot traffic into and out of airports around the country. This also meant that, when the coronavirus pandemic hit, the company couldn’t cope due to its overreliance on rentals at airports. It wasn’t as diversified as some of its competitors, like say Enterprise.
The company bought the wrong cars
It was bad enough that the company ended up buying too many cars, accumulating a lot of debt while at it as discussed over at guttulus.com, the company also bought the wrong cars, which is another factor that contributed to its decline. Hertz had opted to purchase compact cars, purchasing too many of such cars in recent years. The problem was that compact cars had been falling out of favor with American drivers for years now, with many preferring sports-utility vehicles, and as such travelers started to prefer renting cars from its competitors to avoid having to drive their cars. This also contributed to the company’s dwindling sales and eventual decline.
Turmoil at boardroom level
It also didn’t help the company’s prospects that it had gone through 4 CEOs since 2014, as is covered in more detail over at runrex.com. The turmoil at boardroom level prevented the company from reacting to changes in the market, with each CEO coming with their plan and vision. On top of that, the company’s decision to move its headquarters from New Jersey to Florida led to many of its seasoned executives to leave, leaving behind a hole that was hard to fill, and that set Hertz back precipitating its decline.
On top of turmoil at the boardroom level, the fact that decisions being made at that level haven’t always been sound ones is another factor that has contributed to Hertz’s decline. One example of the company’s poor decisions and acquisitions, one that is covered in more detail over at guttulus.com, is their move to buy Dollar Thrifty in 2012, in a deal that was worth about $2.3 billion. Many experts thought that the price was too high, and that proved to be the case as the acquisition never really brought the results hoped for. This is when most experts argue Hertz’s troubles started.
An inability to compete as far as prices are concerned
According to the gurus over at runrex.com, Hertz’s crippling debt also limited its ability to compete with its competitors, both direct like Enterprise, and indirect like the ride-hailing services such as Uber. This meant that it was unable to offer competitive prices, and begun losing market share to its competitors, with travelers opting to go for the cheaper options that were available to them. This is yet another factor that contributed to the company’s decline in recent years.
It’s deal with Apple
While, on the face of it, Hertz’s deal with Apple to work on a small number of self-driving vehicles looks like a positive one, this deal was immediately undermined by the fact that its competitor, Avis, signed a similar deal with Waymo. As is discussed over at guttulus.com, while Hertz’s deal with Apple only involved 6 cars, the Avis-Waymo deal involved over 600 cars in a multi-year deal. On top of that, when it comes to the self-driving vehicle space, Waymo is one of the market leaders while Apple is just a distant challenger. The competitive disadvantage brought about by its deal with Apple versus the Avis-Waymo deal is another factor that has contributed to its decline.
Even though the car rental industry has not been doing too well in recent years, competition has remained stiff, with rivals like Avis and Enterprise ramping up their efforts as discussed over at runrex.com. With increasing competition from direct rivals, coupled with the competition from indirect ones like Uber, Hertz has lost many of its customers, contributing to its decline.