Hertz shares bear brunt of used-car price plunge

Bloomberg

As investor panic spreads about the plunging prices of used cars in the US, one company and its high-profile top investor are enduring the biggest beating: Hertz Global Holdings Inc. and billionaire Carl Icahn.
Hertz shares lost one fifth of their value last week, as a troubling reading for a used-vehicle price index was followed by warnings that lender Ally Financial Inc. and automaker Ford Motor Co. see more pain to come. Hertz is seen as being more exposed than rental-car rivals like Avis Budget Group Inc. to the price slump because its turnaround plans call for selling off an outsize number of aging cars and updating its vehicle fleet.
The drop for the National Automobile Dealers Association’s used vehicle price index in February — the biggest for any month since November 2008 — spurred a market “freak out” about lower used car prices, Matthew Stover, an analyst with Susquehanna Financial Group in Boston, wrote in a report Friday. Chief Executive Officer Kathryn Marinello, a newcomer to the car-rental business, faces doubts that Hertz will emerge unscathed from the value of its vehicles depreciating at a faster rate than a year ago.
“You have a long list of concerns and you can’t give them the benefit of the doubt,” Chris Agnew, an analyst at MKM Partners LLC, said in a phone interview. “They’re not even giving guidance.”
Hertz fell 1.1 percent to settle at $17.25 in New York Monday, the lowest closing price since April 2009. Icahn owns a 35 percent stake after having doubled his position in November by acquiring more than 14 million shares at an average price of almost $24.