Hertz to sell used vehicles online through Amazon Autos partnership

Hertz is partnering with Amazon Autos to sell pre-owned vehicles online, a strategic move to bolster its retail operations and profitability as part of its ongoing turnaround plan. This collaboration expands Hertz's digital reach for its hundreds of thousands of annual vehicle sales, while significantly advancing Amazon's nascent direct-to-consumer auto business into the used car market.

Analysis

Hertz Global Holdings (HTZ) has entered into a strategic partnership with Amazon (AMZN) to sell its used vehicles directly on the Amazon Autos platform, a significant move to bolster its retail car sales division. This initiative is a core component of the "Back-to-Basics Roadmap" turnaround plan led by CEO Gil West, which aims to improve profitability through enhanced fleet management and revenue optimization following the company's 2020 bankruptcy and a subsequent misstep in EV strategy. The collaboration provides Hertz with immediate access to Amazon's extensive customer base, aiming to increase visibility and sales volume for the hundreds of thousands of vehicles it de-fleets annually. This move builds on positive momentum, as Hertz reported its strongest-ever quarter for retail vehicle sales in Q1 and is seeing success with its expanding Rent2Buy program. For Amazon, this partnership marks a critical expansion of its nascent autos business, establishing its first fleet dealer relationship and making a strategic entry into the lucrative used car market, a significant step beyond its initial new-car partnership with Hyundai.

Key Decisions for Investors

• Investors in Hertz should see this as a tangible execution of its turnaround strategy, and should monitor upcoming quarterly results for specific metrics on sales volume and margins generated through the Amazon channel.
• The partnership provides Hertz a potentially high-margin and scalable channel for vehicle disposition, a key operational lever for improving profitability, which could positively impact earnings if execution is successful.
• For Amazon investors, this move represents a low-risk, strategic expansion into the multi-billion dollar used car market; while not material to near-term financials, its performance should be watched as an indicator of Amazon's potential to disrupt automotive retail.