Hertz (HTZ.O) and Avis Budget Group (CAR.O) saw their shares skyrocket on Thursday following U.S. President Donald Trump's proposal to impose a 25% tariff on imported vehicles. The move could make new cars significantly more expensive, potentially driving consumers toward rental options instead of purchasing high-cost vehicles.
Industry experts warn that the tariffs could add thousands of dollars to the price of an average vehicle. The American Automotive Policy Council emphasized the importance of implementing these levies carefully to prevent sharp price increases for buyers.
“This is a win for rental companies,” said Dennis Dick, chief strategist at the Stock Trader Network. “If car prices spike, some consumers may decide it’s easier to rent instead of committing to ownership.”
Hertz surged 23.8%, and Avis Budget climbed 23%, rebounding from steep losses over the past year. Both stocks have been heavily shorted, with Hertz and Avis seeing 14.5% and 13% of their outstanding shares in short positions, respectively. The sudden rally has also been fueled by a short squeeze, further driving up stock prices.
J.P. Morgan analysts noted that the tariffs could also benefit the auto parts and services industry, as consumers may hold onto their existing vehicles longer. This could lead to increased demand for repairs and maintenance, boosting the earnings of companies like O'Reilly Automotive Inc (ORLY.O), AutoZone (AZO.N), and Advance Auto Parts (AAP.N), which saw their stocks gain 2.5% to 5.4%.
Conversely, automakers with international supply chains faced sharp declines, with General Motors (GM.N) dropping 8%