Hertz cuts expenses and modernizes its fleet as the company reports steady progress across its key financial and operational targets for the first quarter of 2025. The global car rental company has shifted its strategy in response to industry challenges, focusing on fleet optimization, cost control, and improved operational efficiency. With early results showing promise, Hertz is preparing for stronger performance in the second half of the year.
Strategic Actions Drive Lower Costs and Smarter Operations
In the first quarter of 2025, Hertz achieved a 45% reduction in net vehicle depreciation compared to the fourth quarter of 2024. This was driven by a focused effort to dispose of underperforming vehicles and optimize the age and mix of the fleet. The company is gradually replacing older, less profitable vehicles with newer models to improve reliability and customer satisfaction while reducing maintenance expenses.
Hertz also completed a significant portion of its cost-cutting strategy. The company reported that direct operating expenses were down 5% quarter-over-quarter, and selling, general, and administrative (SG&A) expenses declined by 12% over the same period. These efforts reflect Hertz’s commitment to aligning its cost base with demand realities while investing in areas that enhance customer experience and operational agility.
Key Q1 2025 Operational Metrics
| Metric | Q1 2025 | Q4 2024 | Change (%) |
|---|---|---|---|
| Net Vehicle Depreciation | Down 45% | — | -45% |
| Direct Operating Expenses | Down 5% | — | -5% |
| SG&A Expenses | Down 12% | — | -12% |
| Revenue per Day | Flat | Flat | — |
| Utilization Rate | Improved | Lower | ↑ |
Although revenue per day remained flat, higher utilization rates helped the company stabilize top-line performance in a still-challenging market. Hertz plans to continue evaluating and adjusting its fleet to respond to evolving demand and market pricing.
Retail Car Sales Drive Record Results
Hertz delivered record results from its retail vehicle sales in Q1 2025, driven by strong consumer demand and improved vehicle mix. The company benefited from a more targeted sales approach and increased digital engagement. As a result, profit per unit in retail sales was higher than expected, further contributing to a stronger financial outlook.
The company noted that off-rental vehicle sales had a positive impact on cash flow and helped accelerate the removal of high-cost assets from the fleet. These sales not only generated immediate revenue but also reduced maintenance and depreciation burdens for the remainder of the year.
What’s Fueling Hertz’s Progress in 2025
- Improved vehicle mix with newer, more reliable models
- More disciplined cost control across operations and staffing
- Expanded retail sales channels and stronger unit margins
- Higher vehicle utilization rates
- Planned technology investments to enhance efficiency
Hertz leadership also confirmed that it remains on track to reach break-even Adjusted Corporate EBITDA in Q3 and return to positive free cash flow in Q4 2025. As part of its updated long-term strategy, the company continues to prioritize margin recovery over short-term volume growth.
Fleet Modernization and Forward Strategy
As Hertz modernizes its fleet, the company has shifted to a more diversified vehicle sourcing strategy. This includes adding a wider range of makes and models to meet varying customer needs, while reducing exposure to any single manufacturer. Additionally, Hertz is selectively managing its electric vehicle (EV) inventory to match real-world demand, citing a more measured approach to EV adoption in the current market climate.
The company’s near-term focus includes further vehicle disposition in Q2, continued expense discipline, and technology investments to improve customer interactions and backend efficiency. These combined efforts are designed to support a stronger, more flexible business model that can scale effectively as travel demand grows.
While the car rental industry continues to face external pressures including used car price volatility and fluctuating demand, Hertz’s leadership believes the foundation laid in Q1 positions the company for stronger financial performance in the second half of 2025 and beyond.
