WEBVTT - Hertz CEO Gil West Talks Motor Sport ROI, Future Growth

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. The investors are awaiting

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<v Speaker 1>the University of Michigan's consumer sentiment data out next hour

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<v Speaker 1>that could shut some weight on how evolving trade policies

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<v Speaker 1>are impacting inflation and household confidence. Matt Miller sat down

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<v Speaker 1>with Tom Wagner, the Nighthead Capitol co founder, in Lela, France,

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<v Speaker 1>and asked him what the FED could be doing to

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<v Speaker 1>stem inflationary pressures.

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<v Speaker 2>I do think the FED needs to cut. Yes, I

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<v Speaker 2>don't think that. I think we're below target inflation, and

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<v Speaker 2>I think that you can make an argument that some

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<v Speaker 2>of the excess spread and rates that we have, you know,

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<v Speaker 2>put inflationary pressures on key consumer products like housing and auto.

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<v Speaker 2>Those are industries that are not doing particularly well at

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<v Speaker 2>the moment, and I think they would benefit from a

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<v Speaker 2>cut and are critically important industries, not just to the

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<v Speaker 2>US economy, to the US consumers.

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<v Speaker 3>Let's go now to Laman for more because Matt Miller

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<v Speaker 3>standing by with the CEO of Hurts. Yeah, thanks very much.

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<v Speaker 4>I do have Gil West here, the CEO of Hurts,

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<v Speaker 4>and Gil great to get some time with you. I

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<v Speaker 4>do want to talk about the business, but first I

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<v Speaker 4>have to ask about your finish last night, Cadillac one

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<v Speaker 4>two Hurts team Yoda locked out the front row for Lamar.

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<v Speaker 3>I mean, how did you do it?

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<v Speaker 5>It's historic stuff, you know. I'm a big gearhead myself

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<v Speaker 5>race vintage and couldn't be happier, couldn't be prouder of

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<v Speaker 5>the team and the partnerships we have. So it's historic

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<v Speaker 5>stuff at the most historic racetrack in the world.

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<v Speaker 4>I always ask CEOs, you know, what's the return on

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<v Speaker 4>investment when it comes to motorsport?

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<v Speaker 3>Because it's fun, So I get why you want to

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<v Speaker 3>do it.

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<v Speaker 4>A lot of people see it maybe as a vanity project,

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<v Speaker 4>but does it really feed down to the bottom line.

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<v Speaker 4>Does your big Hurts logo on that winning Cadillac make

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<v Speaker 4>a difference at the end of the day.

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<v Speaker 5>Yeah, it's racing motorsports, you know, it's part of our heritage.

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<v Speaker 5>Hurts has been involved in motorsports longer than I've been alive.

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<v Speaker 5>You know, me as a customer before I joined Hurts.

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<v Speaker 5>You know sixty five Shelby Hurts GT. You know that.

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<v Speaker 5>You know that drew me to Hurt. So you know,

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<v Speaker 5>we're in the car business and motorsports are central to.

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<v Speaker 4>That in terms of your business, we've had some real

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<v Speaker 4>worries about travel slow down in demand, maybe softer numbers

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<v Speaker 4>than you would have wanted in the first quarter.

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<v Speaker 3>Do you see that picking up now in the second quarter.

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<v Speaker 5>Yeah, I think at an aggregate level, you know, we

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<v Speaker 5>still see your over your growth, you know, as far

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<v Speaker 5>out as we can see. I think the challenge has

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<v Speaker 5>been the mix has shifted. So you know, government travels

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<v Speaker 5>down a bit, but leisure travel, which is our kind

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<v Speaker 5>of highest margin travel, is up. So while the mix

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<v Speaker 5>may shift the US inbound government down, there's other other

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<v Speaker 5>increases in travel as well.

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<v Speaker 4>Herts famously built up its fleet of Tesla's before you

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<v Speaker 4>came on as CEO, and I know you've been working

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<v Speaker 4>to get them down from I think about one hundred thousand.

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<v Speaker 4>How have you worked through that inventory and is that

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<v Speaker 4>part behind you now?

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<v Speaker 5>Yeah? Well, I think the whole industry probably went too

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<v Speaker 5>far too fast with evs. For us, we've rationalized our

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<v Speaker 5>ev fleet and we've reduced it, but more importantly, we've

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<v Speaker 5>rationalized it around where the natural product market fit for

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<v Speaker 5>evs are. So we've got a great partnership with Uber

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<v Speaker 5>and Lyfts, so on the right Hill business that we support.

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<v Speaker 5>There is a lot of demand for ev so we've

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<v Speaker 5>rationalized most of the evs that we have around that.

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<v Speaker 5>We also have them allf airport rentals, which is another

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<v Speaker 5>good product market fit much fewer at the airport.

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<v Speaker 4>You also are one of the biggest sellers of cars,

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<v Speaker 4>and a lot of people don't know that. They think

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<v Speaker 4>obviously of you as a rental car business. But if

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<v Speaker 4>we see car prices go up, does that help your

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<v Speaker 4>business because you can sell cars at a higher price,

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<v Speaker 4>or does it hurt your business because you need to

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<v Speaker 4>replace them at a higher price.

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<v Speaker 5>Yeah, I think we look at the buy in the sell,

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<v Speaker 5>so the difference is what's key for us. Is an example,

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<v Speaker 5>one of our strategies around our fleet is to sell

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<v Speaker 5>more vehicles through retail, which then if you look at

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<v Speaker 5>what we buy vehicles for ultimately what we sell them for,

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<v Speaker 5>you know, it narrows the gap between the two and

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<v Speaker 5>improves our depreciation. So it's a conscious part of our strategy.

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<v Speaker 5>You're right, not a lot of people know that we

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<v Speaker 5>sell cars, but we're one of the largest used car

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<v Speaker 5>dealer ships in the world, so we've grown our capacity

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<v Speaker 5>to sell through retail channels. We do that our seals,

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<v Speaker 5>we digitize the experience, we offer financing, insurance, everything, and

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<v Speaker 5>then we got great partnerships in that space as well.

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<v Speaker 5>But as residual values increase, it certainly helps us in

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<v Speaker 5>the short run.

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<v Speaker 4>In terms of you mentioned the airport locations obviously, and

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<v Speaker 4>then off airport is helpful. You're getting a lot more

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<v Speaker 4>competition right now. What does that do to pricing if

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<v Speaker 4>you have say sixth coming into fifty airports across America?

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<v Speaker 5>Yeah, well, I mean competition will always face competition. You know,

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<v Speaker 5>we're positioned well. We've got an iconic brand, been here

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<v Speaker 5>for over one hundred years for us. We've really focused

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<v Speaker 5>and leaned into what we call back to basics. But

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<v Speaker 5>it's running just a great operational excellence along with enhancing

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<v Speaker 5>our customer experience. So we're differentiated and people want to

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<v Speaker 5>rent from Hurts. And then from a competitive standpoint, we

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<v Speaker 5>positioned ourselves well.

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<v Speaker 4>In terms of investors, we just heard from Tom Wagner,

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<v Speaker 4>you know he at Nighthead.

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<v Speaker 3>They have well over fifty percent stake I think in

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<v Speaker 3>the company.

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<v Speaker 4>And recently we've seen Bill Ackman get involved as well.

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<v Speaker 3>Does Bill want to call you up? Does he get

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<v Speaker 3>you on the phone, Does he give you advice?

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<v Speaker 5>Yeah? Well, first of all, I mean we're really happy

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<v Speaker 5>with his confidence in Hurts and his investment, so we

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<v Speaker 5>welcome an investment, certainly welcome all ideas has included from

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<v Speaker 5>all quarters, you know, as we're looking to transform the business.

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<v Speaker 5>So he's got some great insights, he and his team,

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<v Speaker 5>so we appreciate all the input we can get.

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<v Speaker 3>How do you transform the business?

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<v Speaker 4>I think of a future where we all get into

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<v Speaker 4>a car that drives itself.

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<v Speaker 3>Is that a benefit to you or is that? Is

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<v Speaker 3>that a problem for It's in the future.

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<v Speaker 5>Yeah, we're of course we're a huge fleet manager, right,

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<v Speaker 5>I mean we've got you know, well over half a

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<v Speaker 5>million vehicles. So if you think about large fleets, asset

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<v Speaker 5>heavy footprint to operate them globally, you know, carrying feeding,

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<v Speaker 5>maintenance of all those vehicles. We're one of a few

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<v Speaker 5>in the world that can do this at scale. So

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<v Speaker 5>we're a natural player in the av space.

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<v Speaker 3>And so how soon do you expect that to happen?

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<v Speaker 4>When am I going to go to you know, my

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<v Speaker 4>Hurts location at John Glenn International Airport in Columbus, Ohio

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<v Speaker 4>and get myself a car that can drive me home

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<v Speaker 4>to Granville.

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<v Speaker 5>Yeah, I think it's coming quicker than what we have

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<v Speaker 5>all thought. You know, it's been leading up to the moment,

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<v Speaker 5>but I think right now most major cities in the

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<v Speaker 5>US you're starting to see not just testing but commercial deployment.

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<v Speaker 5>So our aim is to be, you know, one of

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<v Speaker 5>the key players in that mark good space.

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<v Speaker 4>All right, Well, you're certainly one of the key players

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<v Speaker 4>here at the twenty four hours of Little mom It

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<v Speaker 4>was amazing to see.

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<v Speaker 3>You guys qualify in first and second lock out. The

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<v Speaker 3>front row