Hertz Global Holdings and Avis Budget Group both have seen their stock rally during the last few days, with investors cheering up the decision to raise prices as they should bring in theory bigger profits.
Hertz shares soared 8.2% to $24.47 after during the year they dropped by 21% and its largest competitor, Avis also saw the shares going up by 9.9% – the best rally in two and a half years, to $64.48. According to the Naples, Florida-based Hertz, the group decided to raise prices on cars to be picked up after January 1 on December 19 through 21 for the Hertz, Dollar and Thrifty brands. “Fleet costs are escalating due to declining residual values,” commented the decision Chief Executive Officer John Tague, the manager that only came to office last month.
Numerous issues have plagued Hertz this year, including an aging fleet of rental cars and accounting problems that led to the departure of the previous CEO, Mark Frissora. He departed in September after the company wasn’t able to produce financial results in 2014 and also told investors the last three years of financial reports are actually not reliable. Tague has now been tasked to reduce costs beyond its already established program that seeks annual savings of 100 million, increase investment into the renewal of the fleet and return to profit. Hertz said previously to the new CEO’s arrival that it saw around a $1 billion reduction in its target for earnings before interest, taxes, depreciation and amortization.