Car Rental Revenues Experiencing Drop as Profits Rise

Jan 04, 2010
Via Auto Rental News:

At an estimated $20.46 billion, revenue for the U.S. car rental industry in 2009 will have dropped for the first time since 2002. However, auto rental companies are realizing the highest revenue per car in more than 10 years. “This is a positive indicator as to the health of the industry,” says Chris Brown, executive editor of Auto Rental News.

The industry took a beating in the past two years, says Brown, first with a chaotic used-car market brought on by high gas prices and discounting by the car manufacturers, then with the credit crunch and reduced travel demand.

With little credit to buy cars and lower manufacturer incentives, companies were forced to hold cars longer and operate smaller fleets. This resulted in higher rental rates on higher mileage cars. Consumers appear to be assimilating to the change, Brown says, as evidenced by stabilized customer satisfaction scores.

Although revenues were down, cost-cutting measures have improved the bottom line, says Brown. Additionally, a recent lack of supply in the used-car market has strengthened resale values. “The industry appears to be comfortable with this new model of tight fleets and longer lives for cars,” says Brown.

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