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
Jul 23, 2024 - Travel Spending to Return to Pre-pandemic Level in 2025
- 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.
- In July, a routine update of cybersecurity firm CrowdStrike’s software caused computer crashes worldwide, with airlines, governments, banks, and hospitals among the hardest hit, according to Reuters. Hundreds of US flights were canceled over the course of several days due to the outage. According to CNN, car rental firm Hertz saw a spike in car rental demand as stranded passengers’ flights were canceled. Hertz, whose computer and booking systems were unaffected by the systems outage, said demand was especially strong on the East Coast as would-be fliers booked one-way car rental reservations to get to their destinations.
- In mid-April, industry experts who were opening the Car Rental Show in Las Vegas shared their views on the state of the industry, according to Auto Rental News. As of mid-April, year-to-date TSA screenings at US airports are up 7% over the same period in 2023, outpacing GPD growth, which suggests a healthy propensity for travel. As for fleets, rental car firms are adding more vehicles than many industry watchers expected. Vehicle availability is expected to continue to improve, and while prices are still high, they’re expected to moderate later in the year. The speakers noted that day rates for rental cars were down in Q1 compared to Q1 2023, but rates are expected to improve as the travel season heats up.
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