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Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, personal finance education, top-rated podcasts, and non-profit The Motley Fool Foundation.
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Key Points
A competitor's big announcement didn't make Avis look particularly good.
Shares of Avis Budget Group (CAR 5.48%) coughed and sputtered like a stalling car on Hump Day, shedding almost 6% of their price across the trading session. That was almost entirely due to the news that its archrival had secured one of the strongest sales channels in online retail. That 5%-plus decline was notably more pronounced than the S&P 500‘s (^GSPC 1.61%) modest 0.2% drop.
That rival was none other than Hertz Global Holdings, which reported that it has entered into a sales agreement with Amazon Autos. Since Amazon is a near-unavoidable monster in online retail, its vehicle marketplace is an obvious and handy destination for customers searching for new rides.
Image source: Getty Images.
Under the terms of the arrangement, Hertz will sell its used cars through Amazon Autos. Like Avis, Hertz operates a huge fleet stuffed with all major global brands; this will work well in the new sales channel, as potential buyers should be able to find almost any make or model they like on the site.
This is only the latest development in the very long-standing race between the two rental companies, which, after all, offer essentially the same services and have similar footprints in this country (and in many markets overseas). Given that similarity, gaining any competitive edge is important, and the Hertz/Amazon deal certainly qualifies.
With that news, I’d expect Avis to either launch an effort to find a sales outlet or several comparable to Amazon, or intensify an existing try. This is something of a tall order, given the online retailer’s size, scope, and sheer presence. We’ll see what, if anything, the company will come up with.
Eric Volkman is a contributing Motley Fool finance and stock market analyst. Previously, Eric was an equities analyst at European investment bank Raiffeisen Capital and Investment. He’s also been a freelance finance writer since 1995. He studied at Susquehanna University.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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