And some of that is as it relates to the vehicles that were sold during the quarter, some — the vehicles sold during the quarter had a higher advance rate on them, and so the ABS repayment was a higher-than-normal payment. And that includes the effect of the EVs that we sold during the quarter. As we just talked about how EVs had declining residuals during the quarter and that drove $81 million of additional incremental depreciation on the vehicles that were marked, for the portion of the vehicles that were sold, they carried a much higher debt balance because of those, those declining residuals during the quarter. So, that also impacted our cash flow during the quarter.
Gil West: I would just add to, Alex, that as Darren describes, the fleet rotation as it relates to the ABS and liquidity. The deals that we’re seeing now really have a lower cap cost, right? And they tend to be more program vehicle related. So, that will lower our costs as well going in.
Alexandra Brooks: Yes. But just to be clear, we have sufficient liquidity to refresh our fleet, and we don’t anticipate a required ABS funding event.
Lizzie Dove: Got it. Thank you. That’s very helpful. And then just on the — I think you mentioned on RPD, the exit rate for March, I think you said was down 3%, which you continued into April. Was that a global or a U.S. number? And what is driving that? I mean across the board, it doesn’t seem like there’s any demand problem, it’s held it really, really nicely. So, the improvement through the quarter, is that kind of de-fleeting anything to kind of note in the industry there? I’m just curious what’s driving that improvement?
Darren Arrington: Sure. So, Lizzie, a couple of things. That’s a global number that we quoted as the exit rate and the trends that we see as we get into April are very similar in terms of year-over-year decline to that number also globally. I think a couple of things. I think as soon as we saw our fleet tighten towards the end of March, we saw a very compelling improvement in our RPD numbers. And we saw that throughout the month of March as we really got our fleet tight. And I think it’s a reflection of our ability to choose some mix that we’re taking now, that was not available to us when the fleet levels were looser. So that helps. I think also from a point of view of — you’re asking about industry trends, well, Q1 was the hardest compare that we had for RPD last year.
The compares were fairly hard early into Q2, and then got easier towards the back part of Q2 and into Q3 and Q4. So, we are past the hardest compare for RPU in terms of what it means to our year-over-year numbers. And I think we — as we talked about with the fleet and tightening it down underneath where the travel demand is indicating it will be, we expect to be able to yield and to choose segments that we really want to do business in versus not.
Lizzie Dove: Thank you. That’s helpful.
Operator: Thank you. And our next question will come from the line of Stephanie Moore from Jefferies. Your line is open.
Harold Antor: Hello. This is Harold Antor on for Stephanie Moore. I guess on higher repair and collision costs, if you could just go into what are you doing there to mitigate those costs? And I guess what other items under your leadership you plan to drive savings, whether that’s on tech, to improve customer performance, and ultimately drive that RPU — RPD?
Justin Keppy: Thanks Harold. This is Justin, I’ll take that one. So, on the maintenance cost, first of all, I will say on the positive side, we’re about almost 250 basis points improved on our out-of-service if I look from a year-over-year compare. So, we did have a concerted effort driving down out-of-service vehicles. A bit of a headwind there with a little bit higher on the safety recall from a compare. So, without the safety recall, it would be even better from that standpoint. That said, on the productivity side, we are — we have a top 10 list of our top spend categories and everything, from body shops to glass, the tires and the like. And we are consolidating spend and are in the final stages of finalizing these contracts, which we expect on the foreword to be beneficial.
Additionally, our field operations are out locally assessing body shop, both rates as well as time and material, on repair aspects, and we are consolidating those negotiations where we have the ability from a local proximity standpoint. And we anticipate these negotiations to be complete here in Q2, realizing benefit go into the second half. Secondarily, as we rotate the fleet, as older vehicles with longer miles go out and newer vehicles come in, by definition, there’s a lower ongoing maintenance burden as they’re newer on the mileage side. So, we’ll continue to see benefits with the fleet rotation. So, everything we’ve talked about today is very complementary.
Harold Antor: Thank you.
Justin Keppy: And I think the second part of your question, sorry, is around broader cost reduction. So, we are looking globally at all our costs, and we are talking about SG&A as well. It’s in the full scope. And I can say that we’ve put in motion projects that are expected to reduce our corporate spend by over $100 million here in 2024, and we haven’t stopped. As Gil highlighted, he’s also adding incremental ideas, which we expect to update here in Q2.
Harold Antor: Got it. Thanks a lot.
Operator: Thank you. And our last question for today will come from the line of Christopher Stathoulopoulos from Susquehanna. Your line is open.
Christopher Stathoulopoulos: Morning everyone. Thanks for taking my question. So, Gil, I want to go back to your prepared remarks, you outlined four objectives. I realize this is still early days here, but part of that, you spoke about a great opportunity to serve the customer brand strength. Dig into that a little. And how are you thinking about unlocking the brand value across the portfolio? Is it about greater customer engagement or a more frictionless experience within the rental process? And then also, given that you spent a lot of time on the airline industry, you were at Delta curious if you have any thoughts around — there’s clearly been a change here within the industry in so far as post-pandemic demand patterns with blended travel and network changes, and perhaps if you see any opportunities around Hertz in that regard? Thank you.
Gil West: Yes. No, thanks for the question, Chris. Yes, I think on the customer experience piece, I think there’s strong evidence, certainly, the airlines have done it. And I think if you look at Dollar, Thrifty, Hertz dynamics in terms of the correlation between net promoter score and RPD, there clearly exists a relationship between better customer experience and the ability to generate pricing power. So, in terms of the experience itself, I think we have opportunities there. First of all, we’ve got great people on our team that are out there every day serving our customers. So that by itself is a big advantage. There’s a number of initiatives that are people-related, customer service related that are — have been ongoing or in play.
But ultimately, as we cut the NPS data, the biggest thing that stands out is time, right? We all value time. Certainly, our customers do. I think one of the differences between the airlines and the rental car business is we are at the very end of the travel ribbon, right, as you’re flying into an airport. So, all that pressure builds to the end. So, if somebody is standing in front of a counter for a minute, it’s going to feel like an hour, right? So, we’ve really got to value the customer’s time. And a big part of that is very similar, I think, to what the airline journey has been over the years, is that is to create a digital experience that’s frictionless for our customers, that they can move through the process and have a normal channel that just moves quick, frictionless and they can go.
And that will likely fit the majority of our customers over time, but there are some customers that need customer support from agents. Again, I think we’ve got the best people in the business, and we need to do an even better job giving them the tools to serve our customers, which those actions are in work as well. So, one channel doesn’t fit all, I think, is the lesson, but we’ve got opportunities in both with an eye towards pulling cost out of the — or excuse me, time out of the equation. So, that will be our focus. And there’s no doubt in my mind that, as we do that, Net Promoter Scores will improve. We have ongoing proof points of that, in particular, the momentum that we are creating with Dollar and Thrifty. There’s been a lot of focus on all the areas I’ve described around Dollar/Thrifty, and we are seeing our net promoter scores improve substantially in that area.
We still have work to do to get parity in the marketplace. And we know that with an improved customer experience, there’s pricing power assumed with that experience. So, that’s been our focus.
Operator: Thank you. And this concludes today’s Q&A session. This also concludes the Hertz Global Holdings first quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect. Everyone, have a great day.
