Stephen Scherr, the former chief financial officer of Goldman Sachs, has already put a stake in the ground with a new order for 65,000 electric cars from Swedish company Polestar. But can he help fix Hertz so soon after emerging from bankruptcy?
Stephen Scherr, the new CEO of the car rental company Hertzdownplayed the challenge of taking over a company that had just emerged from bankruptcy.
Hertz filed for Chapter 11 bankruptcy protection in May 2020 and emerged from that process in June last year after a long 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 Tuesday, as the company revealed a new order for up to 65,000 electric cars from Swedish company Polestar, Scherr said it was the brand’s heritage that drew him to the role. The former Goldman Sachs chief financial officer visited offices across the United States and said employees were excited and motivated by Monday’s news, as well as the recent 100,000 Tesla order.
“One of the main draws was that it was an exceptionally strong brand. Hertz has been around for 103 years. In the lobby of Hertz’s Florida headquarters is a 1924 Model T Ford. Think of the journey the brand has traveled from the Model T to the Polestar,” he said.
“The company has the potential to truly excel at a time when mobility is truly changing. The iconic nature of the brand is itself an attraction, and the business can grow to match it. And that doesn’t happen often in business and that’s the opportunity here, and the one that really appealed to me. And to be frank, it attracts other talents that I bring to the organization.
The agreement to purchase Polestar cars, over a period of five years, is reportedly worth up to $3 billion, but Scherr wouldn’t be drawn to the details. “From a Hertz perspective, we’re buying a great product at an attractive price, that makes sense to us,” he said. “The economy is good for us, I’m pretty sure it’s good for Polestar as we see it as a smart move.”
Polestar CEO Thomas Ingenlath told Skift this is a market where he has no problem finding customers. “Doing this deal with Hertz is clearly on sound terms,” he said. The deal also helps the company sell used Polestar vehicles – a retail channel it set up last year.
The Certares network
Hertz will be able to rely on growing demand arising from the company’s sustainability goals, as well as its own relationship with American Express International Business Travelwhich is partly owned by a consortium of investors led by Certares.
“This opens up an interesting demand channel among companies looking to reduce their own carbon footprint and put their employees in an electric vehicle,” Scherr said.
Electric car rentals and phone calls continue to attract business travellers, with TravelPerk reporting a 227% increase in electric vehicle usage across all of its bookings in 2021. Since 2020, there has been a 505% increase in the use of electric cars by customers.
“The access Certares provides through American Express Global Business Travel and other sites is powerful in terms of the business we are able to handle,” Scherr added. “This ecosystem around Certares and Knighthead, who remain great owners, alongside the public float of Hertz, is a very powerful combination.”
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 beyond reducing the carbon footprint, added the CEO. “The future of this business and mobility will be very data driven, and we’re sitting on a massive amount of data that we’re looking to leverage, on the vehicle, on travel patterns,” he said.
Similar to the Tesla deal, Hertz will also offer the cars to ride-sharing companies such as Uber and Lyft.