Car rental company Avis Budget Group Inc. reported the best quarterly net income in its history.
Avis’ net income for the third quarter was $1.03 billion, a 53 percent year-over-year increase. Adjusted earnings before interest, taxes, depreciation and amortization rose 38 percent year over year to $1.46 billion. Both figures are records for the company, according to an Oct. 31 statement from Avis, which attributed its success to strong commercial and leisure demand.
Record demand has benefited Avis both in America and abroad. The Americas posted adjusted earnings before interest, taxes, depreciation and amortization of $1.8 billion, while internationally the figure was $291 million, according to the company. Americas revenue was up 24 percent year-over-year, and international revenue was up 127 percent.
While Avis benefited from a recovery in travel, some of the gains were helped by lower depreciation on U.S. rental cars, which can be difficult to maintain in a volatile market, Bloomberg reported. Depreciation drops to $10 per car per month from $143 in 2021. Rental car companies typically expect to amortize more than $250 per car per month, according to Bloomberg.
After a period in which used cars and trucks were expensive and sold quickly, rising general inflation and interest rates have reduced consumer confidence, which market dynamics industry experts warned dealers about 28 October.
This dynamic seems to have affected the car rental company Hertz Global Holdings Inc. The company reports that monthly depreciation per vehicle was $198 in the third quarter, up from just $21 in the same quarter of 2021. Current spending is approaching historic levels, according to Bloomberg.
Hertz sold most of the used cars it needed at the start of the quarter before the decline in prices accelerated, Hertz CEO Stephen Sher told Bloomberg.
Hertz’s net income for the third quarter was $577 million, down about 5 percent from the same period in 2021. The company’s adjusted earnings before interest, taxes, depreciation and amortization were $618 million, down 28 percent from the third quarter. quarter 2021. However, total revenue rose 12 percent year-over-year to $2.49 billion.
Hertz also benefited from travel, renting out 80 percent of its cars in the third quarter — the industry’s pre-pandemic usage level.
The company’s rental rates remain high, with a global average of $68.37 per car per day, up $22 per day from 2018, before the pandemic and before Bankruptcy of Hertz in 2020.
Bloomberg contributed to this report.