Hertz Global Holdings Inc. is planning to at least double monthly sales of retired rental vehicles to retail consumers over the next two years, to between 6,000 and 8,000 units by 2015, chief executive Mark Frissora said. Hertz sells about 16,000 retired rental vehicles a month, of which between 3,000 and 3,200 are sold to consumers.
The move would mean that there will be fewer retired rental vehicles that Hertz will send to auctions. According to Frissora, retired rental vehicles sold through the company’s retail locations generate profits of around $1,100 to $1,500 per vehicle while those sold at traditional wholesale auctions sometimes results to a loss. He remarked that more sales to retail consumer would help trim the risk associated with fluctuating used-vehicle prices.
Frissora said that normally, one doesn’t “take more than a $1,000 to $1,500 a car loss." He said that if he could sell almost equal number of retired rental vehicles on wholesale and retail, he could really mitigated the risk of the residual market.
The company is expecting to hike its number of retail used-car lots to 75 by the end of 2013 from 40 in October, Frissora said. The value of Hertz's retired rental fleet became an issue in September when Frissora said during a presentation at the MKM Partners Entertainment and Leisure Conference that the company had too many vehicles and would gradually cut its fleet by the end of March 2014.