Hertz's Rent2Buy: A Game-Changer in the Used Car Market and Its Investment Potential

The used car market has long been plagued by inefficiencies: opaque pricing, high-pressure sales tactics, and a lack of trust in pre-owned vehicles. Hertz's Rent2Buy program, launched in 2025, is rewriting the rules of this $400 billion industry. By combining extended test drives, digital convenience, and risk-mitigation guarantees, Hertz is not just disrupting traditional auto retail—it is creating a new paradigm that could unlock significant long-term value for the company and its investors.

The Rent2Buy Model: A Disruptive Force

Hertz's Rent2Buy program allows customers to rent a vehicle for up to three days at a low daily rate ($55–$85, depending on the car's price). If the customer decides to buy, all rental fees are waived, and the purchase can be finalized online or from home. This “try before you buy” approach addresses a critical pain point: the fear of hidden costs or mechanical issues in used cars. The program's 80% conversion rate—far exceeding traditional dealership models—demonstrates its effectiveness in building consumer confidence.

The model's success lies in its alignment with modern consumer behavior. Today's buyers demand transparency, flexibility, and digital-first experiences. Hertz's program delivers all three. For example, every Rent2Buy vehicle comes with a 12-month/12,000-mile limited powertrain warranty, 24-hour roadside assistance, and a 7-day/250-mile buy-back guarantee. These protections eliminate the need for haggling and reduce the perceived risk of purchasing a used car.

Moreover, Hertz is leveraging its existing fleet and infrastructure to scale the program efficiently. By repurposing its rental cars—many of which are 2025 models with low mileage—the company avoids the high costs of acquiring new inventory. This “sweating the assets” strategy not only boosts margins but also accelerates vehicle turnover, ensuring a steady supply of competitively priced cars.

Strategic Positioning in the EV Market

One of the most compelling aspects of Rent2Buy is its focus on electric vehicles (EVs). Hertz is offering Tesla Model 3 and Model Y vehicles at prices as low as $13,700 after the Inflation Reduction Act's $4,000 tax credit. These vehicles, originally purchased at full price in 2021, are now accessible to a broader demographic, accelerating EV adoption. By addressing the stigma around used EVs—through transparent battery health reports and maintenance records—Hertz is positioning itself as a key player in the green mobility transition.

The EV segment is a growth engine for Hertz. In Q2 2025, 13% of Hertz's vehicle sales came from Rent2Buy, with the company aiming to increase this to 50% within two years. This shift aligns with broader industry trends: EVs now account for 10% of U.S. new car sales, and the used EV market is expected to grow at a 25% CAGR through 2030. Hertz's early-mover advantage in this space could translate into outsized returns for investors.

Financial Metrics and Long-Term Value

Hertz's Q2 2025 earnings report underscores the program's financial impact. The company's depreciation per unit (DPU) reached $251, exceeding its target of sub-$300 by 16%. This improvement is driven by the “Buy Right, Hold Right, Sell Right” strategy, which optimizes fleet lifecycle management. Additionally, Hertz's gross DPU is projected to hit $300 per quarter in the second half of 2025, supporting its $1 billion EBITDA goal.

The Rent2Buy program also enhances Hertz's unit economics. By monetizing unused fleet capacity and reducing the need for traditional dealership infrastructure, the company is achieving cost efficiencies. For instance, direct operating expenses (DOE) declined 3% year-over-year in Q2 2025, while vehicle utilization hit 83%. These metrics highlight Hertz's ability to generate revenue from its assets while maintaining operational discipline.

From an investor perspective, Hertz's stock appears undervalued relative to its growth potential. The company's liquidity of $1.45 billion provides flexibility to invest in digital innovation or weather macroeconomic headwinds. With the used car market expected to grow at a 5% CAGR through 2030, Hertz's disruptive model positions it to capture a larger share of this expanding pie.

Risks and Mitigants

While the Rent2Buy model is promising, risks remain. Competition from traditional dealerships and emerging DTC platforms could erode margins. Additionally, macroeconomic factors—such as rising interest rates or supply chain disruptions—might dampen consumer demand. However, Hertz's focus on digital transformation, strategic partnerships (e.g., with Cox Automotive), and asset-light operations provide a buffer against these risks.

Investment Thesis

Hertz's Rent2Buy program is more than a novel sales tactic—it is a structural shift in automotive retail. By addressing consumer pain points, leveraging digital innovation, and capitalizing on the EV transition, Hertz is redefining the used car market. For investors, the company's disciplined fleet management, strong unit economics, and alignment with long-term trends make it an attractive long-term play.

Actionable Advice: Investors should consider adding Hertz to their portfolios as a speculative but high-conviction bet on the future of mobility. Monitor the company's Q3 2025 earnings for updates on Rent2Buy's scalability and its ability to meet EBITDA targets. Additionally, track Tesla's stock performance, as Hertz's EV strategy is closely tied to the success of the broader EV ecosystem.

In a market where trust and transparency are paramount, Hertz's Rent2Buy program is not just disrupting—it is leading.