Auto Rental & Leasing
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 2,400 auto rental and leasing companies in the US provide vehicles for short-term or long-term use. Rentals and leases typically involve passenger cars or trucks. Companies may also provide the use of vans, sport utility vehicles, luxury cars, limousines, or hearses. Some companies lease used vehicles. While large rental companies own thousands of individual locations worldwide, they also license brand names to independent operators.
Dependence on the Travel Industry
Air travel is a key driver for car rental volume.
Resale Risk
Companies bear the risk of decreases in residual value for vehicles reaching the end of their rental or lease life.
Industry size & Structure
A typical auto rental company employs 50 workers and generates around $17-18 million annually, while a typical auto leasing company operates a single location and generates about $34 million annually.
- The auto rental and leasing industry consists of 2,400 companies that employ 129,500 workers and generate $55.1 billion annually.
- The auto rental and leasing industry is concentrated at the top, and fragmented at the bottom; the top eight firms account for 86% of total revenue. Most small companies operate out of a single location.
- While large rental companies own thousands of individual locations worldwide, they also license brand names to independent operators.
- Large auto rental companies include Enterprise Holdings (Alamo, Enterprise, National), Hertz, and Avis. Major companies that provide auto leasing services include Element Fleet Management, and Holman (formerly ARI Global Fleet Management).
Industry Forecast
Auto Rental & Leasing Industry Growth
Recent Developments
Sep 23, 2024 - Length of Collision-Related Rentals Drops
- The average length of rental (LOR) for a collision-related car rental in the second quarter of 2024 was 16 days, down 1.4 days compared to the same period in 2023, according to a report released in August by Enterprise Rent-A-Car. LOR is the period a consumer rents a vehicle while their personal vehicle is in the shop after an accident. The Q2 2024 drop in LOR is due to a reduced backlog of vehicles awaiting repair. The average backlog usually declines from Q1 to Q2 by about two to three days, but in Q2 2024, the backlog shrunk by almost nine days, marking the largest drop in backlogs since the onset of the pandemic. Industry observers suggest LOR and backlogs dropped as collision repair parts supply chains have recovered from pandemic-related disruptions and a 2023 UAW strike.
- An Avis data breach in August 2024 compromised the data of about 300,000 people, according to Tech HQ. The breach resulted from hackers gaining unauthorized access to one of the firm’s commercial applications. Avis reacted promptly by shutting down access to the application and enlisting the help of cybersecurity specialists and law enforcement. Affected consumers have been notified and are offered one year of free credit monitoring from Equifax.
- Global travel spending – a demand indicator for rental car services – is expected to reach pre-pandemic levels by next year, according to recent data by the US Travel Association. Worldwide travel spending is expected to reach $1.129 trillion in 2024 and then increase to 1.173 trillion in 2025, which would match travel spending levels in 2019. US travelers plan to take over 800 million interstate trips in 2024, near pre-pandemic levels.
- The auto rental and leasing industry is expected to see weaker sales growth this year, but demand is projected to remain steady, if a bit flat, over the next several years. The industry’s year-over-year sales are projected fall to growth of 2.8% in 2024 after rising 6.1% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to rise to 5.3% in 2025. The industry will then see steady but mostly flat average annual growth of about 5.1% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
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