With many companies revaluating their business travel programmes to align with today’s environmental issues, the purchase could be a solid long-term investment for Hertz.

The US car rental giant announced its intention to purchase 100,000 electric vehicles from Tesla, estimated to be worth approximately $4.2 billion. It follows a substantial turn in fortune for Hertz after clambering out of Chapter 11 bankruptcy on 1 July 2021. As many businesses are under pressure to reduce their carbon footprint, the purchase can attract a wide range of business travellers as companies look to enforce more sustainable travel management programs.

Hertz’s fleet will meet the needs of modern business travel programmes

With continuing pressure on all industries, businesses are under more pressure than ever to reduce their carbon footprint. According to Raconteur, 53% of the company’s carbon footprint is a product of business travel. Therefore, a need to reduce air travel and utilize cleaner, more efficient forms of travel is needed. Electric vehicle rental solves this. Given the current global warming and climate change situation, more businesses will incorporate electric vehicle rental into their business travel policy. Ultimately, Hertz now has a significant unique selling point (USP) as it has acquired the largest electric vehicle rental fleet globally (according to its press release) making it the go-to car rental provider for sustainable travel. Not to mention, there is generally a highly positive sentiment towards Tesla’s prestige and brand image.

GlobalData opinion polls* suggest that some businesses will take note of this development from Hertz. According to one GlobalData poll, 27% of global respondents said that most companies are fully committed to ESG (Environment, Social and Governance issues), and 26% said that they felt some companies are, but others are using it as a marketing ploy. Furthermore, in an additional GlobalData poll, 33% said their business was working towards changing its sustainability goals over the next 12 months, highlighting that there is a movement towards more environmentally friendly travel programmes. The challenge for Hertz is its product positioning. The business travel landscape is hugely competitive, and many products are purchased using third parties (Travel Management Companies). Hertz can capitalise on its leading electric vehicle proposition, but it will need to strengthen trade and B2B relations and incentivise the use of its electrical fleet.

Hertz has the potential to be a leader in business rentals

With the world’s largest electrical fleet, a big brand name to boot and a sound promotional strategy, Hertz has the potential to become a leader in the business rental market. It will undoubtedly face stiff competition, and its reputation took a significant blow in June 2020 when it filed for bankruptcy. The deal with Tesla adds an element of prestige to its fleet and makes customers feel good about their carbon footprint. It is safe to say Hertz has an excellent opportunity to rebuild its brand significantly, but the execution must be right before it truly is a market leader.

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