The car rental company Avis Budget Group Inc. reported its best quarterly net profit in its history.
Avis’ net income for the third quarter was $1.03 billion, a 53 percent increase over the same period a year earlier. 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 business and leisure demand.
Record demand benefited Avis both in America and internationally. The Americas posted adjusted earnings before interest, taxes, depreciation and amortization of $1.8 billion, while that figure rose to $291 million internationally, the company said. Americas earnings were up 24 percent compared to a year ago, and international earnings were up 127 percent.
While Avis benefited from a rebound in travel, some profits were helped by lower depreciation on its U.S. rental cars, which can be difficult to maintain in a changing market, Bloomberg reported. Depreciation fell to $10 per car per month from $143 in 2021. Car rental companies can typically 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 dampened consumer confidence, a market dynamic that industry experts warned of on 28 October
That changing dynamic appears to have affected rental car company Hertz Global Holdings Inc. The company reports depreciation per car per month of $198 for the third quarter, a jump from just $21 in the same quarter of 2021. Current costs are running at historic rates. according to Bloomberg.
Hertz sold most of the used cars it needed early in the quarter, before the decline in prices accelerated, Hertz CEO Stephen Scherr told Bloomberg.
Net income attributable to Hertz in the third quarter was $577 million, a decrease of approximately 5 percent from the same period in 2021. Adjusted corporate earnings before interest, taxes, depreciation and amortization were $618 million dollars, down 28 percent from the third quarter. quarter 2021. However, total revenue rose 12 percent from last year to $2.49 billion.
Hertz also benefited from a recovery in travel, leasing 80 percent of its cars in the third quarter, the industry’s pre-pandemic utilization rate.
The company’s rental rates remain high, averaging $68.37 per car per day globally, an increase of more than $22 per day since 2018, before the pandemic and before Hertz’s bankruptcy in 2020
Bloomberg contributed to this report.