Topic to discuss developments in the car rental industry
Article: Car Rental Industry - InvestmentWiki
These are Statista forecast for global car rental revenue
An annual growth rate of 3.14% is expected between 2024 and 2028, resulting in a projected market volume of US$116.00bn by 2028.
I found data on the producer price index for rental cars in the US. This year, prices have begun to deflate more significantly. However, they are still approximately 10% higher than in 2019.
Other rental car websites 1 2 show similar deflation trends for summer 2024 in several important cities.
All sources attributed the decline in pricing to the normalization of fleet supply.
As we can see in the US they are indeed already back to normal, and fleet sales continue to be positive.
I anticipate or think is conservative to expect continued pressure on pricing in the second half of 2024 and into 2025, though at a more stable rate, possibly declining by another 5% (since it seems the bulk of the adjustment already happened). This is due to increased supply. And that although travel demand remains strong, it is likely to moderate as the phenomenon of “revenge travel” fades and consumers become more constrained due to a softer global economy.
https://www.wsj.com/lifestyle/travel/cheap-rental-cars-sixt-turo-51501bbf
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Insights from the International Car Rental Show in Las Vegas 2024
This was a private show, news is only a summary
According to the experts, the car rental industry will experience moderate growth, driven by strong travel demand and increasing fleet availability.
However, operators will face challenges around pricing pressures and the evolving dynamics of electric vehicles (EVs).
The industry’s profitability will hinge on efficient fleet management, particularly as competition grows and off-lease vehicles return to the market by late 2025-2026. Adaptability and pricing strategies will be essential for navigating these mixed conditions.
Some of their observations:
- TSA screenings at airports are still strong, with a growth rate above that of GDP
- More vehicles will become available to the industry this year and on better financial terms.
- Strong returns in 2021-2022 will continue to attract more competitors to the rental car industry, increasing pricing pressure.
- Low-rate offers currently available remain a significant challenge for pricing in the rental car companies.
- Limited lease returns in 2024/2025, but a surge in off-lease vehicles will crowd the market by late 2025-2026. Residual values are stable for the next 12-18 months.
- Vehicle resale volatility will depend on remarketing strategies.
- Rental companies should focus on accurate demand forecasting and keep fleet decisions as flexible as possible.
- EV adoption varies by region, influenced by charging infrastructure and climate. Many customers avoid EVs due to charging concerns in unfamiliar areas.
- The used EV market capacity is in question in in terms of added supply, battery valuations, and consumer interest
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Q3 2024 Rental Fleet Update
Year-to-date (YTD) fleet sales for the first three quarters of 2024 amounted to 1,651,900, down 2.7% from the same period in 2023.
- Rental fleet sales are still up YTD at 804,089, for an increase of 1.3% compared to 793,561 rental vehicles sold the first three quarters of 2023.
Fleet sales are not expected to get to 2019 yet, and 2024 expected to remain mostly flat compare to 2023.
- Annual totals show the rental car industry bought 1,738,993 fleet vehicles in 2019, compared to 1,019,225 vehicles in 2023 and a projected 1,057,073 vehicles for the full calendar year of 2024.
Bobit, owner of Automotive Fleet, Vehicle Remarketing, and Auto Rental News , compiles fleet sales numbers that reflect aggregate figures from the three major Detroit-based auto manufacturers and the Asian Big 6 automakers.
Oh that’s very interesting. I did not know that levels have been so much lower than usual given that Sixt expanded its fleet size.
The two last posts refer to the U.S market only, correct?
Yes, both Hertz and Avis also reported having a lower fleet than 2023 to try to match demand and keep pricing stable.
It seems currently the priority for these companies is rotating the fleet to handle depreciating costs as soon as possible, and not necessarily growing it.
Over the remainder of the year, we intend to manage our fleet levels below the same periods in 2023.
As we tighten the fleet, we will benefit from culling low RPD, low contribution demand served through discretionary low price channels and contract freight business. These changes are highly actionable and removal from our book of business will improve our overall profitability.
goal has been and always will be to ensure that our fleet is kept inside of our demand. And while the quarter shows our fleet size to be up 2%, we started July with fleet down over prior year.
will continue to prioritize price over volume, and we’ll do our part to keep our fleet tight to strengthen our pricing opportunities.
With this prudent approach, we can expect to start 2025 with significantly fewer cars than we started in 2024.
The fleet numbers are for US, and the post about the rental industry is more general terms I think, no specific region was mentioned, but is still most likely US primarily.
The website seems to cover news from all regions.
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Q4 2024 Car Rental Update
This is US Industry only
- Industry on target about $37.9 billion in annual revenue this year, down slightly from $38.4 billion
- The year-to-year flatline resulted from level demand, a decline in rental rates, slight over-fleeting of rental cars, and higher vehicle depreciation costs.
- The revenue per month (RPU) was $1,387 for 2024, down slightly from $1,412 (RPU) in 2023.
Trends for 2025:
- Fleet availability in improving, with higher incentives
- Intense competition is putting downward pressure on rates, with cost growth outpacing price growth. One of the drivers is flattening costumber volume, but higher fleet volumes.
- High interest rates a remaining risk because they drive up cost while demand slows, keeping price rates low
- 75% operations is now tied to how well operators cycle fleet acquisitions and vehicle remarketing
- Wholesale used vehicle market should return to normal within the mid 2025-2027 period
Total U.S. fleet vehicle sales eased down by 2.5% in 2024
- Rental fleet sales reached 1,036,830 up a slight 1.7% from 1,019,225 in 2023. Rental cars took 49% of the total fleet vehicle sales last year.
- Rental fleet volume remains over 700,000 units, or over 40%, below pre-pandemic levels
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Europe Car Rental Industry by Statista
- By 2025, the Car Rentals market in Europe is estimated to generate revenue of US$17.72bn.
- The revenue is expected to grow annually at a rate of 2.83% from 2025 to 2029, resulting in the market volume of US$19.81bn by 2029.
- The projected number of users in the Car Rentals market is 72.06m users by 2029.
- In 2025, the expected user penetration is 7.8%, which is projected to increase to 8.6% by 2029.
- The average revenue per user (ARPU) is expected to be US$270.90.
- The Car Rentals market is projected to generate 73% of total revenue through online sales by 2029.
- Comparing globally, the highest revenue in the Car Rentals market is expected to be generated in United States, with US$32,690m in revenue projected for 2025.
- In Germany, the car rental market is experiencing increased demand for electric and hybrid vehicles.
https://www.statista.com/outlook/mmo/shared-mobility/car-rentals/europe
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