Hertz CEO Kathryn Marinello says 2017 “will take the brunt of the earnings impact with 2018 better positioned to reap the benefits” to execute against the company’s long-term strategy and a significant level of investment.

“Everything we’re doing to transform the company is premised on having the right fleet,” Marinello said during the company’s recent first-quarter earnings call. “Just two months ago I shared with you a set of key priorities to drive sustainable incremental growth in our U.S. Rental Car business over a multi-year horizon. Today, we remain committed to those priorities. We’re realigning and upgrading our fleet mix to reflect customer preference and capture profitable demand. We are promoting loyalty through service excellence. Our legacy systems are being updated for greater flexibility, increased productivity and enhanced capabilities, and we’re leveraging our brands and capitalizing on our assets to generate growth.”

In the rent-a-car industry, cars matter, Marinello noted.

“Toward that end, we’re taking a necessary depreciation hit this year to upgrade our vehicle mix to better match customer preferences, while at the same time aggressively de-fleeting to optimize capacity quickly,” she said. “As such, we knew the first quarter and even the first half of 207 would be especially tough. What was unexpected, however, was that the typical seasonal upswing in used car values did not occur in February this year as is usually the case, but was delayed into March, which put added pressure on earnings. Still, we sold 21 percent more vehicles year-over-year in the first quarter and keeping with our long-term strategy to closely match fleet to realistic levels of demand to ultimately drive profitable growth. We did not chase demand to solve for utilization.”

Service quality is another key priority for top line growth, Marinello said.

“We continue to invest in improving customer-facing processes to drive speed and service excellence,” she added. “On the marketing front, we’re focused on enhanced digital applications to leverage our assets and rebuild brand awareness. Investment in sales and marketing are on track as we remain committed to these strategic marketing plans I shared with you last quarter.”

Technology investment will support the success of all Hertz growth initiatives.

“These types of transformations can best be described as slow and steady, and Hertz is no different,” Marinello said. “I’m pleased with the progress we’re making, the partners we team with, and the pace of the work. It’s never going to happen as fast as we would like, but the team here is thoughtful and forward-thinking and are committed to getting it done right.”

In the first quarter, Hertz continued to roll out its new CRM platform, which launched in last year’s fourth quarter.

“We expanded work on the fleet management and accounting systems, which we expect to activate mid-year next year,” she added. “We’re also beginning the build-out of the reservation and rental systems for a late 2018 introduction and we’ve activated our second revenue management module.”

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