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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

                                    Coronavirus Update

                                    Apr 28, 2022 - US Light Vehicle Sales Estimate Downgraded
                                    • In April 2022, Toyota Motor downwardly revised its outlook for the US auto industry’s total 2022 new car sales amid continued supply chain disruptions and the war in Ukraine, according to Reuters. Toyota’s latest forecast calls for US total light-vehicle sales of 15.5 million units, down from the previously forecast 16.5 million. Toyota Motor North America’s EVP of Sales, Bob Carter, stressed that the issue is with supply, not demand, as the US appetite for new vehicles remains strong.
                                    • Rental-car companies that sold off many vehicles when demand was extremely low during the early months of the coronavirus pandemic are still having trouble replacing them. Supply-chain problems in the auto manufacturing industry — most notably a prolonged semiconductor shortage, continue to limit the number of vehicles available for purchase. In April 2022, J.D. Power said it expects inventory challenges to hinder car rental companies’ ability to operate effectively for the foreseeable future.
                                    • Staffing shortages have resulted in longer vehicle maintenance times for auto rental firms. “Because there’s labor problems at every vendor that you use, they have the same labor problems that we have,” said Michael DeLorenzo, senior vice president of NP Auto Group. “Everything is slower. Even recalls are taking longer.” Lorenzo also said that recruiting has been difficult. “Nobody is showing up for interviews,” he said. “We changed in-person interviews to telephone interviews to Zoom interviews, and the people still aren’t showing up for interviews, even on Zoom.”
                                    • Car-sharing platforms are seeing increasing demand due to a pandemic-related shortage of vehicles and high rental rates at auto rental firms. Analysts say that the lack of readily available reservations for summer vacations and the greater variety of cars available for rent are key factors prompting travelers to turn to car-sharing platforms.
                                    • Auto rental companies have resorted to buying used vehicles at auction due to pandemic-related supply chain issues that have slowed new vehicle production. The demand from rental firms is sending used-car costs soaring. Analysts say that, despite the acquisition expenses, the car crunch is a boon for rental companies, which likely will have strong profits because they’ll rent out every car that they own at much higher rates than they charged before the COVID-19 pandemic began. Seasonally-adjusted consumer prices for car and truck rental rose 11.8% in March 2022 compared to the prior month. On an unadjusted basis, car and truck rental prices were up 23.4% compared to March 2021.
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