At Eckhaus Fleet, our customers tell us they are tightly controlling fleet size. They also see higher rates in most markets, longer utilization of their fleet vehicles and a strong used-vehicle market. Airlines report the return of the business traveler, which bodes well for airport operators.
Finance is the life blood of the auto rental industry. We asked Wayne Yocum of Automobile Finance Corporation, Shane O'Dell of Dealer Services Corporation, Jeff Iverson of GE Capital, Don Hankey of Hankey Group and a rental operator as well (Midway Rent A Car) and Joe Opferman of 1st Source Bank, leaders in the auto rental financing community, about their expectations for the coming model year.
■ How are your rental customers doing?
Wayne Yocum: Our rental customers have weathered the storm and are doing well. Typically, rental operators who have maintained a disciplined approach to managing their fleets have increased DDA (Daily Dollar Average), utilization and RPU and are making good money. An essential part of the profitability equation is having adequate financing that allows rental operators to achieve the right mix and volume; a balanced fleet.
Shane O'Dell: We find our existing RAC operators have adapted very well in the changing times. Their inventory is at moderate levels, and rental percentages are up due to tighter inventory numbers and demand.
Jeff Iverson: I would say that our customers have weathered the "Great Recession" pretty well. For the most part, they have come through the economic turmoil in pretty good condition; at least their balance sheets seem to portray a much "healthier" business than 18 to 24 months ago.
Don Hankey: Profit is up 50 percent and business is up. Midway Rent A Car should have its best month ever. Tough financing has forced competition to go after profit and not market share.
Joe Opferman: Our customers are doing well. We are encouraging them to build their balance sheets during this period. Money is available for strong balance sheets. We have grown our outstanding loan balance over the prior year by more than 40 percent, which is a big number. That is almost $100 million. We have added many new customers and increased our exposure on existing accounts significantly. Is credit tight? Yes. Our operators should hope that it remains tight as history has proven that the industry does not have the self control to keep fleets at reasonable sizes.