Hertz sales increasingly bypass auctions
Hertz Global Holdings Inc. sold more retired rental vehicles in the United States last year than the year before, with a rising share of the sales going directly to dealers and consumers, CEO Mark Frissora said.
Sales directly to dealers and consumers are more profitable than sales through auctions, Frissora told analysts during the rental-car company's fourth quarter conference call.
Frissora said Hertz sold 17 percent more used vehicles in the United States in 2012 than in 2011 as a result of a higher mix of so-called risk vehicles: 95 percent in 2012 vs. 83 percent in 2011.
The rental company bears the responsibility of remarketing risk vehicles when they are retired from rental use, whereas the manufacturer bears the remarketing responsibility for so-called program vehicles.
The company didn't say how many units it sold in 2012, but the average number of vehicles in its U.S. fleet last year was 395,100 units, up 12 percent, including Hertz, Thrifty and Dollar company-operated units.
In 2012, Hertz sold 38 percent of its used vehicles directly to dealers, up six percentage points from 2011, and 15 percent directly to consumers, up 3 percentage points, slides accompanying Frissora's presentation showed. Hertz sold 47 percent of its vehicles through wholesale and online auctions, down 9 percentage points.
Hertz Dealer Direct, the initiative to sell off-rental vehicles directly to dealers, had a booth at the National Automobile Dealers Association convention in Orlando last month. One dealer at the convention, set up with an account so that he could be given a demo of the system, bought a car while he was still at the booth.
Frissora also raised his forecast for synergies from the acquisition of Dollar Thrifty Automotive Group Inc. in November. Hertz now predicts cost synergies of $300 million and revenue synergies of $300 million from 2013 through 2015 vs. an earlier forecast of annual savings of $65.6 million in fleet costs, in part through sharing of vehicles.
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