Stephen Scherr, the former Goldman Sachs chief financial officer, has already put a stake in the ground with a new order for 65,000 electric cars from Sweden's Polestar. But can he help fix Hertz so soon after its exit from bankruptcy?
Stephen Scherr, the new CEO of car-rental firm Hertz, has downplayed the challenge of taking over the helm of a company that only recently exited bankruptcy.
Hertz filed for Chapter 11 bankruptcy protection in May 2020, and came out of that process in June last year after a drawn-out bidding war. It emerged with a $6 billion reorganization plan funded by travel investor Certares as well as Knighthead and Apollo.
Speaking to Skift on Monday, as the company revealed a new order for up to 65,000 electric cars from Sweden’s Polestar, Scherr said it was the brand’s legacy that attracted him to the role. The former Goldman Sachs chief financial officer has been touring offices across the U.S. and said employees were excited and motivated by Monday’s news, as well as the recent 100,000 Tesla order.
“A key attraction was that this is an exceptionally strong brand. Hertz has been around for 103 years. In the lobby of the Hertz headquarters in Florida sits a 1924 Model T Ford. Think about the journey that the brand has been on since the Model T now through to the Polestar,” he said.
“The business has the potential to really excel at a moment in time when mobility is genuinely changing. The iconic nature of the brand is itself an attraction, and the business can grow to live it up to it. And that doesn’t happen frequently in business and it’s the opportunity here, and one that really attracted me. And to be candid, it’s attracting other talent that I’m bringing into the organization.”
The deal to buy the Polestar cars, over a period of five years, is reportedly worth up to $3 billion, but Scherr wouldn’t be drawn on the specifics. “From a Hertz point of view, we are buying a great product at a price point that’s attractive, it makes sense to us,” he said. “The economics are right for us, I’m near certain they’re right for Polestar as we embrace this as a smart engagement.”
Polestar CEO Thomas Ingenlath told Skift this was a market where he doesn’t have a problem finding customers. “Doing this deal with Hertz is clearly on healthy terms,” he said. The deal also helps the company sell pre-owned Polestar vehicles — a retail channel it set up last year.
The Certares Network
Hertz will be able to rely on increasing demand arising from corporate sustainability goals, as well its own relationship with American Express Global Business Travel, which is part-owned by a consortium of investors led by Certares.
“It opens an interesting demand channel among corporates looking for to reduce their own carbon footprint, and put their employees into electric vehicle,” Scherr said.
Electric car rentals and hailing continue to appeal to business travelers, with TravelPerk reporting a 227 percent jump in electric vehicle takeup across its bookings during 2021. Since 2020, it’s seen a 505 percent increase in electric car usage by customers.
“The access Certares provides by way of American Express Global Business Travel and other venues is powerful in terms of the business we’re capable of driving,” Scherr added. “That ecosystem around Certares and Knighthead, who remain formidable owners, alongside the public float of Hertz, is a very powerful combination.”
The cars from Swedish electric car maker Polestar will be available from late spring in Europe and late 2022 in North America and Australia. But the partnership also goes deeper than reducing carbon footprints, the CEO added. “The future of this business and of mobility is going to be a lot about data, and we sit on an enormous amount of data that we look to mine, about the vehicle, about travel patterns,” he said.
Similar to the Tesla deal, Hertz will also offer the cars to ride-hailing firms such as Uber and Lyft.
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Tags: american express global business travel, business travel, carbon emissions, ceo interviews, certares, climate change, corporate travel, electric cars, hertz, lyft, sustainability, travel management
Photo credit: Hertz will buy up to 65,000 electric cars from Sweden's Polestar. Hertz