Elizabeth Warren wants to know how Hertz went from bankruptcy to buyout in six months


Have you been to a Hertz office recently? I was at Los Angeles International Airport last month. It didn’t look like a successful business. It wasn’t like walking into, say, an Apple store, beaming with brushed steel and white walls and pleasant, immaculately groomed sales people. It wasn’t even like walking into a Starbucks. It was like stepping into a soup kitchen for the homeless: understaffed staff, seedy decor, long lines, disgruntled customers. An employee told me to pick up my car from a separate office a few miles away (“Take an Uber”); the industrial looking building I was sent to didn’t have any kind of sign indicating who I was dealing with. The only attendant on the scene said it didn’t matter that I had booked a reservation. There were no cars. The managers had overbooked, he said, and every time they do that they come home and let me deal with angry customers like you. I felt sorry for him.

Yes, Covid has created supply chain problems for Hertz and other car rental companies, as well as a labor shortage that makes it difficult for Hertz to recruit staff. Still, it was difficult to reconcile my customer experience with a company that is doing so well that its profit margin is 39% and so flush that it is buying back its own shares. Profits rose not because Hertz leased more cars; they were standing because Hertz was renting less cars, prices, according to an analyst cited by Warren, 147% higher than before the pandemic.

The supply chain snafu drove car prices up, but, as Warren further pointed out, Hertz’s prices for what he called “the elements of car rental prices that management has the ability to control ”were on the rise. 44 percent over the previous year. Hertz was unsuccessful financially despite its seedy rental offices, the loss of half of its staff, its inability to supply many rental cars, and the shockingly high price it charged for the few rental cars available. It was thanks to these things that she was financially successful. It acted a lot like a company owned by two finance companies.

What is happening at Hertz is emblematic of what is happening in American companies. Some people examine this picture and conclude that the increased concentration of companies and the increase in profits shows that they are becoming more powerful than ever. It’s true. Other people watch companies’ indifferent treatment of all staff except senior executives, their reluctance to even pretend they are providing customer service until someone does. a bad smell on social networks, and their desperation to please shareholders and conclude that businesses have become miserably weak. This is also true.


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