Car Rental 2014 — Full Speed Ahead

In our opinion, 2013 was one of the more interesting years in our coverage of the rental car industry.

Avis Budget led a flurry of mergers and acquisitions, Hertz began initial efforts to integrate Dollar Thrifty and fundamental factors drove operators to begin to manage a moderating used car market in addition to a demand environment impacted by curtailed government travel.

All of this considered, we view 2013 as a successful year for most in the rental industry, and we are optimistic that the industry is in a better place than it was just a few short years ago.

As we close the book on 2013, we wanted to provide the readers of Auto Rental News with a view of key items the investment community will likely be watching as it relates to industry trends in 2014.

WILL CONSUMER CONFIDENCE REBOUND IN 2014 AND ALLOW FOR A MORE PRONOUNCED PICKUP IN DEMAND?

Leading indicators appear positive, and we note a number of airlines, after curtailing capacity in recent years, are leaning toward increasing capacity. Additionally, fuel prices have declined year-over-year, which could help discretionary spending trends and lift the spirits of leisure travelers.

This noted, we also highlight that comparisons should be easier as the industry will not likely experience the same headwinds year-over-year — ones created by the government sequestration and the fall shutdown.

CAR COSTS AND RENTAL RATES — ARE THEY RELATED?

We spend a tremendous amount of time discussing the used car market and rental rates with investors. Oftentimes, investors will develop views related to the future trajectory of each of these metrics independent of one another.

While fleet costs are ultimately something the used car market drives and operators manage, we believe it is unreasonable for investors to analyze fleet costs without contemplating utilization and pricing.

As we look to 2014, we expect industry capacity to contract a bit, primarily a function of Hertz working through fleet realignments with Dollar Thrifty as well as Avis Budget integrating the Payless operations.

Additionally, we believe that profitability per-car per-month is an important measure for many operators. If input cost (car costs) increase, output pricing should move higher as well.

CONTINUED:  Car Rental 2014 — Full Speed Ahead
« Previous  |  1  2  |  Next »

Comments

  1. Beenu [ May 7, 2014 @ 09:55PM ]

    I am very happy to read this article..thanks for giving us nice

Comment On This Story

Name:  
Email:  
Comment: (Max. 10000 characters)  
Please leave blank:
* Please note that every comment is moderated.

Newsletter: Sign up to receive latest news, articles, and much more.

Read the latest

Auto Focus Blog: A blog covering fleets, auto rental and the business of cars

The Customer Isn’t Always Right

Not caving to a customer with a blatant agenda may have consequences, especially for a small rental company that relies on stellar Yelp ratings to advertise. But business integrity must prevail.

The Truth Behind Compact Van Depreciation

Why are large van values holding up better than their compact counterparts, and will it last?

Car Rental’s Call to Action on Autonomous Vehicles

The car rental industry has built-in advantages to support a world with driverless cars, but it needs to take the next step in partnering with autonomous vehicle stakeholders.

Job Finder: Access Top Talent. Fill Key Positions.