(Reuters) -Rental car firm Hertz Global reported a wider-than-expected third-quarter loss and missed revenue estimates on Tuesday, hurt by high depreciation charges from its fleet vehicles, sending its shares down more than 4%.
The company recorded a $1 billion asset impairment charge during the quarter, citing a decline in fleet values over the last year following an overall decline in car prices as consumers delay large purchases in an uncertain economy.
Earlier this year, the company said it would slim down its vehicle inventory, with a sale of about 30,000 electric vehicles including Tesla (NASDAQ:) cars, citing higher repair costs related to the vehicles.
But cooling used car demand could prove to be a headwind for Hertz, which had placed a bet on EVs with a massive order to buy roughly 100,000 Tesla cars in 2021.
In its latest report, market research firm Cox Automotive said that affordability remains a challenge for consumers, with fewer models for sale in the $15,000 price bracket, which is more popular among used car buyers.
Hertz’s depreciation per unit surged 89% to $537 million in the quarter ended Sept. 30 from a year earlier.
On an adjusted basis, the company lost 68 cents per share compared with analysts’ average estimate of a loss of 50 cents, according to data compiled by LSEG.
Overall quarterly sales fell 5% to $2.58 billion from a year earlier, compared with analysts’ estimates of about $2.7 billion.
