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 2,300 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

The average auto rental and leasing company employs 55 workers and generates $20 million in annual revenue.

    • A typical auto rental company employs 227 workers and generates around $17-18 million annually.
    • A typical auto leasing company operates a single location and generates about $34 million annually.
    • The auto rental and leasing industry consists of 2,300 companies that employ 191,300 workers and generate $47 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.
    • Auto rentals account for about 72% of industry revenue, while auto leasing accounts for 28%.
    • Large auto rental companies include Enterprise Holdings (Alamo, Enterprise, National), Hertz, and Avis. Major companies that provide auto leasing services include Element (formerly GE Capital Fleet Services and PHH Arval), and ARI Global Fleet Management.
                                    Industry Forecast
                                    Auto Rental & Leasing Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Mar 27, 2023 - Auto Dealer Sentiment Stable
                                    • According to Cox Automotive, US automobile dealer sentiment was stable in the first quarter of 2023 but was in negative territory. The Cox Automotive Dealer Sentiment Index (CADSI) in Q1 2023 was 43, unchanged from the fourth quarter of 2022 but down 14 points compared to Q1 2022. A CASDI reading below 50 indicates that more dealers view market conditions as weak. However, the three-month, forward-looking market outlook index increased to 52 in the first quarter of 2023 from 41 in Q4 2022, indicating most dealers have an optimistic view for the second quarter. Dealers ranked interest rates as their top business impediment, followed by the economy, and limited inventory.
                                    • In speaking at a March JPMorgan Chase & Co. investor conference, airline executives said they were optimistic about travel demand for the rest of the year, according to The Wall Street Journal. Airline chiefs said consumer demand for travel was holding up, especially for leisure and trips that combine business with vacations. Delta Airlines’ CEO said business travel was about 80% recovered to pre-pandemic levels. Inflation has the potential to slow travel demand as airlines’ costs, including fuel and labor, push airfare higher. However, inflation eased slightly in February, rising 6% compared to a year earlier, which was down from the 6.4% year-over-year increase in January. Travel activity is a key demand driver for car rental and aircraft leasing.
                                    • A majority of US corporate travel buyers expect business travel levels to reach pre-pandemic levels by the end of the year, according to a recent report by the Global Business Travel Association (GBTA). Nearly three-quarters of travel managers surveyed said they expect domestic business travel to return to pre-pandemic levels by the end of 2023, and 76% had the same view for conference/group travel. Citing inflation, 10% of travel managers do not expect business travel demand to fully recover until 2025 or later. More than two-thirds of companies surveyed said they were unlikely to limit business travel.
                                    • More rental car customers are planning to hire more cars beyond the traditional busy season and rent more cars in September and October to take advantage of greater vehicle availability and lower pricing, according to a recent report by CarTrawler, a B2B car rental, and mobility services firm. The report also revealed that nearly 90% of people who rented a car in the past 12 months planned to rent again over the coming 12 months – the highest the metric has been since 2020. CarTrawler notes that given an environment of increased economic uncertainty, rental customers will place a premium on value, superior customer service, and flexible cancelation policies.
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