diff --git a/changelog/changes/2024-04-11-hyperv-images-compression.md b/changelog/changes/2024-04-11-hyperv-images-compression.md
new file mode 100644
index 00000000000..7df43b2d29a
--- /dev/null
+++ b/changelog/changes/2024-04-11-hyperv-images-compression.md
@@ -0,0 +1 @@
+- Hyper-V images, both .vhd and .vhdx files are available as `zip` compressed, switching from `bzip2` to a built-in available Windows compression - `zip` ([scripts#1878](https://github.com/flatcar/scripts/pull/1878))
diff --git a/ci-automation/vms.sh b/ci-automation/vms.sh
index 7d4d9d31980..9583fb0c11a 100644
--- a/ci-automation/vms.sh
+++ b/ci-automation/vms.sh
@@ -136,6 +136,8 @@ function _vm_build_impl() {
             COMPRESSION_FORMAT="gz,bz2,none"
         elif [[ "${format}" =~ ^(qemu|qemu_uefi)$ ]];then
             COMPRESSION_FORMAT="bz2,none"
+        elif [[ "${format}" =~ ^(hyperv|hyperv_vhdx)$ ]];then
+            COMPRESSION_FORMAT="zip"
         fi
         ./run_sdk_container -n "${vms_container}" -C "${packages_image}" \
             -v "${vernum}" \