Hertz CEO Gil West Talks Motor Sport ROI, Future Growth
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Bloomberg Audio Studios. Podcasts. Radio. News. Investors are awaiting the University of Michigan's consumer sentiment data out next hour that could shed some light on how evolving trade policies are impacting inflation and household confidence. Matt Miller sat down with Tom Wagner, the Knighthead Capital co-founder in Le Mans, France, and asked him what the Fed could be doing to stem inflationary pressures.

I do think the Fed needs to cut, yes. I don't think that, I think we're below target inflation. And I think that, you know, you can make an argument that some of the excess spread and rates that we have, you know, put inflationary pressures on key consumer products like housing and auto. Those are industries that are not doing particularly well at the moment. And I think they would benefit from a cut and are critically important industries, not just to the U.S. economy, but to the U.S. consumers.

Let's go now to Le Mans for more because Matt Miller standing by with the CEO of Hertz. Yeah, thanks very much. I do have Gil West here, the CEO of Hertz. And Gil, great to get some time with you. I do want to talk about the business, but first I have to ask about your finish last night. Cadillac won two. Hertz team Yoda locked out the front row for Le Mans.

I mean, how did you do it? It's historic stuff. You know, I'm a big gearhead myself, race vintage, and couldn't be happier, couldn't be prouder of the team and the partnerships we have. So it's historic stuff at the most historic racetrack.

in the world. I always ask CEOs, you know, what's the return on investment when it comes to motorsport? Because it's fun, so I get why you want to do it. A lot of people see it maybe as a vanity project, but does it really feed down to the bottom line? Does your big Hertz logo on that winning Cadillac make a difference at the end of the day? Yeah, racing motorsports, you know, it's part of our heritage. Hertz has been involved in motorsports longer than I've been alive.

You know, me as a customer, before I joined Hertz, you know, the 65 Shelby Hertz GT, you know, that drew me to Hertz. So, you know, we're in the car business, and motorsports are central to that.

In terms of your business, we've had some real worries about travel, a slowdown in demand, maybe softer numbers than you would have wanted in the first quarter. Do you see that picking up now in the second quarter? Yeah, I think at an aggregate level, we still see year-over-year growth as far out as we can see. I think the challenge has been the mix.

has shifted. So, you know, government travels down a bit, but leisure travel, which is our kind of highest margin travel, is up. So while the mix may shift, the U.S. inbound, government down, there's other increases in travel as well.

Hertz famously built up its fleet of Teslas before you came on as CEO. And I know you've been working to get them down from, I think, about 100,000. How have you worked through that inventory? And is that part behind you now? Yeah. Well, I think the whole industry probably went too far too fast with EVs for us.

Yeah, we've rationalized our EV fleet and we've reduced it. But more importantly, we've rationalized it around where the natural product market fit for EVs are. So we've got a great partnership with Uber and Lyft. So on the ride hail business that we support,

There is a lot of demand for EVs, so we've rationalized most of the EVs that we have around that. We also have them off airport rentals, which is another good product market fit, much fewer at the airports. You also are one of the biggest sellers of cars, and a lot of people don't know that. They think, obviously, of you as a rental car business, but...

If we see car prices go up, does that help your business because you can sell cars at a higher price or does it hurt your business because you need to replace them at a higher price? Yeah, I think we look at the buy and the sell, so the difference is what's key. For us, as an example, one of our strategies around our fleet is to sell more vehicles through retail, which then if you look at what we buy vehicles for, ultimately what we sell them for, you know, it narrows the gap between the two.

and improves our depreciation. So it's a conscious part of our strategy, right? Not a lot of people know that we sell cars, but we're one of the largest used car dealerships in the world. So we've grown our capacity to sell through retail channels. We do that ourselves. We digitize the experience.

We offer financing, insurance, everything. And then we've got great partnerships in that space as well. But as residual values increase, it certainly helps us in the short run. In terms of, you mentioned the airport locations, obviously, and then off airport is helpful. You're getting a lot more competition right now.

What does that do to pricing if you have, say, sixth coming into 50 airports across America? Yeah. Well, I mean, competition will always face competition. You know, we're positioned well. We've got an iconic brand, been here for over 100 years. For us, we've really focused and leaned into what we call back to basics. But it's running just a great operational excellence along with enhancing our customer experience. So we're differentiated and people want to.

rent from Hertz and then from a competitive standpoint we've positioned ourselves well. In terms of investors we just heard from Tom Wagner you know he at Nighthead they have well over 50 percent stake I think in the company and recently we've seen Bill Ackman get involved as well.

Does Bill want to call you up? Does he get you on the phone? Does he give you advice? Yeah. Well, first of all, I mean, we're really happy with his confidence in Hertz and his investment. So we welcome his investment, certainly welcome all ideas, his included, from all quarters, you know, as we're looking to transform the business. So he's got some great insights, he and his team. So we appreciate all the input we can get. How do you transform the business? I think of a future where...

We all get into a car that drives itself. Is that a benefit to you or is that a problem for Hertz in the future? Yeah, of course we're a huge fleet manager, right? I mean, we've got well over half a million vehicles. So if you think about large fleets, asset heavy, footprint to operate them globally, carrying, feeding, maintenance of all those vehicles,

We're one of the few in the world that can do this at scale. So we're a natural player in the AV space. And so how soon do you expect that to happen? When am I going to go to my Hertz location at John Glenn International Airport in Columbus, Ohio and get myself a car that can drive me home to Granville? Yeah, I think it's coming quicker than what we have all thought. It's been leading up to the moment, but I think right now...

most major cities in the US you're starting to see not just testing but commercial deployment. So our aim is to be one of the key players in that market space. - All right, well you're certainly one of the key players here at the 24 Hours of Le Mans. It was amazing to see you guys

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