Former Ford CEO Mark Fields can’t seem to shake ties to his former employer, agreeing to become interim CEO of Hertz.
The rental car company, which exited bankruptcy in June, was once owned by Ford Motor Co. The automaker sold the business in 2005 for $5.6 billion as the company was shedding many of its non-core assets.
Fields joined the Hertz Global Holdings Inc. board of directors in June and takes over for Paul Stone immediately. Stone shifted into the role of president and chief operations officer, according to Hertz.
“Hertz is a global icon, and I’m honored to help lead the company into its next 100 years,” said Fields in a statement. “Hertz’s unmatched global footprint will be combined with forward-looking investments that completely change the face of travel and mobility. The world is going to be hearing a lot from Hertz in the weeks and months ahead.”
In addition to his new role, Fields is senior advisor at TPG Capital, Lead Independent director of Tanium and serves on Qualcomm’s Board of Directors. He spent 28 years in various roles at Ford.
Crushed by COVID
The COVID-19 pandemic damaged a lot of industries, but few like the rental car industry. The lack of travel basically wiped out any need for rental cars. In addition, the extra costs involved in prepping a fleet of vehicles to combat the virus added significant costs to an already underfunded ledger.
As a result, Hertz, which also owns other rental-car brands, such as Dollar and Thrifty, filed Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware, in May 2020. The move gave it time to reorganize under the supervision of a bankruptcy judge. Hertz said in its filing it held assets of nearly $26 billion but also had debts of more than $24 billion.
Hertz said in a press release accompanying the filing that the impact of COVID-19 on travel demand was “sudden and dramatic,” causing an abrupt decline in the company’s current and future bookings.
“Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today’s action,” the statement said.
Hurting the auto industry
As part of its reorganization plan, Hertz sold more than 182,000 vehicles leased from automakers. The auto industry was hit hard by COVID not just because there was a period of time where consumers weren’t purchasing vehicles, but also rental car companies weren’t either.
“We’re not going to be shipping cars to rental fleets for some time,” Mark LaNeve, Ford’s then-head of sales, services and marketing for North America, told TheDetroitBureau.com at the time. He also noted that Hertz rivals such as Avis and Enterprise also are curtailing new vehicle orders, instead planning to continue using vehicles already in their fleets.
Rental car companies in general stopped buying new vehicles from all automakers in the U.S. The move cut nearly 2 million units from the industry’s sales volume for 2020.
Hertz could have done worse, a lot worse, like Jim Hackett.