Hertz Turnaround Plan: Pricing, Depreciation, and Cash Flow

Hertz Global Holdings HTZ is trying to turn improving fundamentals into a more durable earnings and cash flow profile. Pricing is stabilizing, fleet economics are getting a lift from lower depreciation, and growth is broadening beyond the airport channel.

HTZ Pricing Is Stabilizing With Better Revenue Tools

Industry pricing has become more stable, and management expects global pricing to rise slightly year over year in the March quarter. The improvement is expected to be supported by both the Americas and International segments.

A key data point is revenue per transaction day, which has improved sequentially on a year-over-year basis through 2025. That trend reflects tighter revenue execution and better use of pricing tools. Hertz is also testing further upgrades to pricing systems, which could extend the gains as those tools roll out.

The company’s capacity plans are designed to stay within demand. Airport growth is being kept in line with, or below, Transportation Security Administration trends. That approach supports better pricing discipline and a stronger mix, which matters in a business where small rate moves can influence margins quickly.

Hertz Depreciation Trend Is a Key Margin Lever

Depreciation per unit is one of the most important drivers of unit economics in vehicle rental. It is a direct cost of using and disposing of the fleet, and it can move sharply when used vehicle values change. That makes depreciation a critical margin lever as the company works toward more consistent profitability.

Hertz made progress in 2025. In the fourth quarter, depreciation per unit fell to $330 per month from $418 a year earlier, helped by more disciplined buying, holding, and selling. There was also a late non-cash adjustment tied to a residual value update, highlighting how quickly the line can still shift.

Management expects depreciation per unit to drop below $300 in 2026 as vehicle mix improves and resale values normalize. If that happens, it reduces a major cost input and supports the company’s longer-term profitability goals.

HTZ Fleet Strategy Focuses on Control and Younger Age

Fleet strategy is central to lowering volatility. Hertz is emphasizing disciplined purchasing decisions, tighter hold periods, and more controlled vehicle sales timing. The objective is to limit the profit swings that can come from buying at the wrong point in the cycle or selling into weak seasonal conditions.

The company has also secured 2026 model-year vehicle purchases at expected prices and volumes. That increases planning visibility and improves control over the fleet’s composition. It also helps Hertz align capacity with demand rather than chasing volume.

Operationally, the fleet is younger. Average fleet age was reduced to under 10 months, and utilization remained solid despite recall-related disruptions. A younger, better-managed fleet should support a more predictable cost profile as rental activity increases.

Hertz Growth Is Shifting Beyond Airport Demand

Hertz is leaning into growth areas outside the traditional airport channel. Off-airport revenue represented 34% of worldwide vehicle rental revenue in both 2025 and 2024, underscoring the scale of the opportunity. The company is targeting incremental growth through off-airport locations, with particular emphasis on insurance replacement, local commercial deals, and small business rentals.

Mobility is another focus area. The mobility segment, supported by a large rideshare rental fleet, carries double-digit revenue potential in management’s view. Momentum in off-airport and mobility was also noted alongside improving airport pricing in the Americas.

Investors tracking the category often compare Hertz with Avis Budget Group CAR, another major operator in vehicle rental and mobility services. In a different part of the transportation services landscape, ZTO Express (Cayman) Inc. ZTO shows how diversified the sector can be, with logistics growth drivers that are not tied to travel cycles.

HTZ Digital Retail Vehicle Sales Could Smooth Cash Flow

Vehicle sales are a meaningful part of Hertz’s operating model, and management is trying to make those proceeds more consistent. The company plans to grow digital car sales in 2026, with the goal of increasing retail sales from about one-third of total vehicle sales today.

Timing matters. Spring is typically a peak buying season, and management expects higher tax refunds to support demand. A higher retail mix can also improve disposal economics if execution improves at the ground level.

The plan is to lift profit per vehicle through better reconditioning efficiency and higher attachment from financing and insurance. If resale values remain stable and the retail mix rises, cash from vehicle sales should become more consistent. That supports the company’s goal of being roughly cash-flow neutral after the March 2026 quarter.

Hertz Road Map: 2026 Margin Range and 2027 EBITDA Goal

Management has outlined a clear recovery path. For 2026, Hertz maintained an adjusted EBITDA margin outlook of 3% to 6%. It also reiterated a 2027 adjusted EBITDA target of $1 billion.

To make those targets credible, several execution items need to land. Pricing needs to keep improving under disciplined capacity planning. Depreciation must follow through toward the sub-$300 per month range, helped by mix and steadier resale values. And the company needs fewer operational disruptions from recalls, while continuing to lower direct operating expenses per day toward its longer-term targets.

Liquidity is another swing factor. Corporate liquidity was about $1.5 billion at year-end 2025, then dipped after a January 2026 payment. Management expects liquidity to trough below $1 billion by mid-2026 before improving with planned actions and better free cash flow after the March quarter. A smoother operating profile, combined with steadier vehicle sales proceeds, would go a long way toward supporting the turnaround narrative.

HTZ’s earnings surprise history is a modest one. In the four trailing quarters, its earnings surpassed the Zacks Consensus Estimate twice and missed in the other quarters. The average beat exceeds 100%.

Hertz Global Holdings Price and EPS Surprise

Hertz Global Holdings price-eps-surprise | Hertz Global Holdings Quote

HTZ’s Zacks Rank

Hertz carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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