Rental car company Avis Budget Group Inc. reported its best quarterly net income in its history.
Avis’ net income for the third quarter was reported at $1.03 billion, a 53 percent increase from the same period a year ago. Adjusted earnings before interest, taxes, depreciation and amortization rose 38 percent from last year to $1.46 billion. Both figures are records for the company, according to an Oct. 31 statement from Avis, which attributes its success to strong commercial and leisure demand.
Record demand benefited Avis both in the Americas and internationally. The Americas posted adjusted earnings before interest, taxes, depreciation and amortization of $1.8 billion, while that figure came in at $291 million internationally, according to the company. Americas earnings rose 24 percent compared to a year ago and international earnings increased 127 percent.
While Avis benefited from a rebound in travel, some profits were assisted by lower U.S. depreciation on its rental cars, which can be tough to maintain under a shifting market, Bloomberg reported. Depreciation fell to $10 per car per month from $143 in 2021. Rental car companies can normally expect to see depreciation of more than $250 per car per month, according to Bloomberg.
After a period in which used cars and trucks appreciated and sold quickly, rising general inflation and interest rates have slowed consumer confidence, which is a market dynamic industry experts warned dealers about on Oct. 28.
That changing dynamic appears to have affected rental car company Hertz Global Holdings Inc. The company reports depreciation per car per month at $198 for the third quarter, a jump from just $21 in the same quarter in 2021. Current costs are headed toward historic rates, according to Bloomberg.
Hertz sold most of the used cars it needed to early in the quarter, before price decline accelerated, Hertz CEO Stephen Scherr told Bloomberg.
Third-quarter net income attributed to Hertz was reported at $577 million, about a 5 percent decrease from the same period in 2021. Adjusted corporate earnings before interest, taxes, depreciation and amortization was reported at $618 million, a 28 percent decline from third-quarter 2021. Total revenue, however, rose by 12 percent from last year to $2.49 billion.
Hertz also benefited from a travel bounce back, renting out 80 percent of its cars in the third quarter — the industry’s utilization rate prior to the pandemic.
The company’s rental rates remain high, with an average of $68.37 per car per day globally, which is up by more than $22 a day from 2018, before the pandemic and prior to Hertz’s bankruptcy in 2020.
Bloomberg contributed to this report.