Hertz stock jumps on deal to sell its used cars on Amazon

Hertz (HTZ) has partnered with Amazon Autos (AMZN) to sell its used fleet vehicles directly through Amazon's platform, making Hertz Car Sales the first fleet dealer on Amazon Autos. This strategic collaboration, enabling customers to browse, finance, and purchase vehicles online for local pickup, propelled Hertz's stock up 9% in premarket trading and further expands Amazon's growing presence in the automotive sales market, following its recent deal with Hyundai for new vehicle sales.

Analysis

Hertz (HTZ) has entered into a strategic partnership with Amazon (AMZN) to establish a new sales channel for its used vehicle inventory, a move that prompted a 9% premarket surge in HTZ stock. By becoming the first fleet dealer on Amazon Autos, Hertz gains access to Amazon's extensive consumer base, aiming to streamline the car-buying process with online browsing, financing, and purchasing capabilities. This initiative is being fortified with customer-centric features, including a 115-point inspection, a 12-month/12,000-mile powertrain warranty, and a seven-day buyback guarantee, designed to build trust and mitigate perceived risks of buying used fleet vehicles online. For Amazon, this collaboration represents a significant expansion of its automotive marketplace, complementing its recent agreement with Hyundai for new car sales and signaling a deeper strategic push into the auto retail sector. While the deal is a clear positive for Hertz, providing a potential reputational lift after a recent PR issue involving an AI vehicle scanning tool, its initial rollout is limited to four metro areas with plans for future expansion.

Key Decisions for Investors

• Investors should view this partnership as a significant positive catalyst for Hertz, creating a major new sales channel through Amazon's vast marketplace that could accelerate used vehicle turnover and enhance profitability.
• It is prudent to monitor the execution and geographic rollout of the program, as its success is contingent on seamless integration and positive customer experiences, especially given Hertz's recent negative PR on other tech implementations.
• For Amazon investors, this deal solidifies its strategic push into the automotive retail sector, representing an incremental positive but likely having a less material impact on its overall valuation compared to Hertz.