Car rental firm Hertz is latest victim of auto recalls
By Rohit T. K. and Sagarika Jaisinghani
(Reuters) - While an improving U.S. economy has helped rev up demand for car rentals, the rental companies have found themselves short of vehicles due to the slew of recalls by car manufacturers this year.
The latest casualty was Hertz Global Holdings Inc, whose stock slumped as much as 13 percent on Wednesday after the company withdrew its full-year financial forecast, blaming a shortage of cars due to the recalls and costs associated with an accounting error.
Activist investor Carl Icahn on Wednesday reported an 8.48 percent stake in Hertz and said he intended to engage in talks with management on accounting issues and operational failures. (1.usa.gov/1pff6PW)
Icahn said in a regulatory filing that he would also discuss the company's underperformance and lack of confidence in management with Hertz.
Hertz said in a statement that it valued the views of all its shareholders and welcomed "a constructive dialogue" with them.
Hertz shares pared losses after the Icahn stake was disclosed, and closed down 3.9 percent at $30.33.
Hertz, Avis Budget Group Inc and market leader Enterprise Rent-A-Car control about 90 percent of the U.S. car rental market.
"They (Hertz) weren't able to get the benefit of a strengthening market because they simply didn't have the cars," Michael Millman of Millman Research Associates told Reuters. Continued...