Hertz seeks new growth

Two announcements by Hertz a week apart may be more related than at first blush.

On April 7, the Estero-based car rental giant announced it made a venture capital investment in an Uber-like valet parking and car service startup in San Francisco called Luxe.

Just five days later, on April 11, Hertz told investors it expects revenues to be lower than anticipated. The news sent shares down 11% that day.

In a statement, Hertz blamed “excess industry capacity” for the expected slump in revenues. “We are disappointed that the pricing pressure experienced late in 2015 further intensified in the first quarter of 2016,” says President and Chief Executive Officer John Tague in a statement. “However, we believe that industry capacity will likely moderate as seasonal demand improves, establishing the foundation for a relative improvement in pricing as we head into the peak summer season.”

There's speculation Uber has been a thorn in Hertz's side and some prospective customers may be forgoing renting a car in favor of the taxi-like service, especially in big cities. Hence Hertz's investment in Luxe, which offers valet car service in cities where parking is hard to find, including Chicago, New York and San Francisco.

The fact that Tague is also now a member on the board of Luxe suggests the urgency of the matter. Expect to hear more about that development soon.