Why did Hertz's operating profit plummet in Q4 2024 despite revenue growth?

Hertz's operating profit plummeted in Q4 2024 despite revenue growth due to a combination of factors: 1. **Asset Impairment Charge**: Hertz incurred a significant asset impairment charge, primarily related to the decline in fleet residual values, which amounted to over $1 billion. This non-cash expense severely impacted the company's profitability, even with revenue growth. 2. **Depreciation Costs**: The company's depreciation per unit (DPU) was high at $537 per unit per month in Q3, with expectations of $350 to $375 in Q4. These depreciation costs are a result of Hertz's large fleet size and the rapid depreciation of vehicles, especially electric vehicles like Tesla, which have higher purchase prices and higher repair and maintenance costs. 3. **Challenges in Fleet Management**: Hertz faced challenges in managing its fleet efficiently, including a decline in fleet residual values and increased repair and maintenance costs. Despite implementing a proactive fleet management strategy, the company still had to contend with these inherent costs in the rental car industry. 4. **Market Volatility and Industry Trends**: The leasing services sector experienced overall decline, with Hertz facing additional headwinds in areas like insurance and revenue-related expenses. The company's strategic initiatives to optimize fleet efficiency and improve customer experience are positive steps but may take time to yield significant results, especially amidst market volatility. In summary, Hertz's operating profit was negatively impacted by a combination of asset impairment charges, high depreciation costs, challenges in fleet management, and market trends, despite revenue growth.