Hertz Car Rental to Measure Division Operating Efficiency

Case Type: organizational behavior.

Consulting Firm: KPMG Advisory second round job interview.
Industry Coverage: business service; automotive, motor vehicles.
Case Interview Question #00508: Hertz Global Holdings, Inc. (NYSE: HTZ) is an airport general use car
rental company headquartered in Park Ridge, New Jersey, United States. As of December 2010, the
Hertz company operates from approximately 8,500 locations in 146 countries, of which approximately

one-fifth are airport locations and four-fifths were off-airport locations. In the car
rental market, Hertz competes with Avis Budget Group, Inc., Enterprise Rent-A-Car Company and Dollar
Thrifty Automotive Group, Inc.
Recently, you have been appointed the regional manager of Hertz’s Midwest Division. In this region,
Hertz operates a peak rental fleet of more than 25,000 cars and employs approximately 1,500 people. As
the new manager, how would you measure your division’s operating efficiency? What are the factors you
should look at?
Possible Answer:
This case question is a good example for the “Value Chain” approach. Provided below is a list
(incomplete!) of issues that needs to be taken into consideration.
 What are your expenses in cars, insurance, rental of branch office, employee salary, marketing and
advertising, etc?
 What is your average rental time period? On average how long is a car checked out?
 How fast is a vehicle turned around (from drop-off to back on the line)? What is the industry average
for this turnaround?
 What percentage of your fleet is down for repairs on average? How does this compare to the industry
average?
 What percentage of your employees call out sick every day on average? How does this compare to
the industry?
 Does the business exhibit any seasonality? For example, car rental branches located near a ski
resort will probably see business boom in the winter, how do you account for these effects?
Another way to look at this case question is to use a real-life “out-of-the-box” approach. Why not simply
look out on the parking lot and see how many cars are rented out at any given time, and what kind of cars
they are, and do this over a period of time in different locations? This kind of real-world approach will win
points with management consultants, who actually have to drive around and look at parking lots at 4 a.m.
(and other such hijinx) more often than they would probably like.