U.S. Car Rental Revenue Dives 27.4% in 2020
The U.S. car rental market achieved a projected $23.22 billion in revenue for 2020, the lowest overall revenue since 2011, according to data collected by Auto Rental News. The 27.4% drop in total revenue for 2020 compared to revenue of $32 billion in 2019 is historically unparalleled, in fact much steeper than during the Great Recession when revenues only dropped 6.7% from 2008 to 2009.
The industry averaged 1.98 million units in its overall fleet in 2020, a 12.4% decline over 2019. As a result, revenue per unit, per month (RPU) dropped to $975 for the year, from $1,174 in 2019.
“With a near total air travel shutdown, the Hertz and Advantage bankruptcies, an unexpectedly hot used car market, and a seismic, forced shift to local rentals, this year will enter the record books as the most disruptive in car rental’s history,” said Chris Brown, executive editor of Auto Rental News.
This year more than ever, the industry can be divided into quarters. “The first quarter ended as one of the most profitable and promising since exiting the Great Recession,” Brown said. “The economic and societal shutdown defined the second quarter. The third quarter saw a massive supply correction, with car rental companies able to capture newfound demand in the fourth quarter.”
Supply chain shutdowns constricted wholesale supply to the point that car rental companies were able to sell sitting fleet at extraordinary prices during the summer, normally peak season for travel. “The used car market was the industry’s salvation, to be sure,” Brown continued.
With the need for personal mobility favoring shared transportation, business shifted to the local market, and rental operators enjoyed a buoyed rate environment with the remaining tight fleet.
Mileage for rental risk units plunged in the first two months of the pandemic as rental fleets were grounded. But as business picked up and rental units were sold, the mileage on remaining units easily exceeded record highs. Average mileage for rental risk units in November was 54,200 miles, up 11% compared to a year earlier.
“We likely won’t know the full effect of 2020 on the car rental industry — and society — until we have the benefit of time,” Brown said. “However, we can assess how industries reacted to the pandemic right now. As a whole, the U.S. car rental industry has demonstrated its ability to meet the demands of the moment.”
“We can start calling 2021 ‘the recovery year.’ With a smaller footprint and more efficient processes — yet with the ability to grow rapidly — the car rental industry is well poised to take advantage of the coming economic recovery.”
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