Slowing demand, soft pricing and increasing fleet costs resulted in fourth-quarter losses for all three major publicly traded car rental companies.
Hertz Global Holdings last week reported a $1.21 billion loss for the fourth quarter of 2008, with revenue down 16 percent for the quarter to $1.8 billion. "Unfortunately, the progress we made in many areas during 2008 was outweighed by the severe impact on the overall falling demand, competitive pricing and higher fleet costs as residual baggage declined in the car rental business as well as the more significant downturn in our highly profitable rental segment," Hertz chairman and CEO Mark Frissora said in a statement.
U.S. pricing was down by 6 percent at airport locations and by 2 percent at off-airport locations, according to Hertz, as the company was unable to sustain a price increase announced in late October.
Avis Budget Group reported a $121 million loss for the quarter, citing what CEO Ronald Nelson called an "unprecedented set of challenges." The company enacted an aggressive cot-cutting plan during the quarter, eliminating more than 2,100 positions, closing 27 locations and reducing expenses, including those of its loyalty program.
Car rental revenues for the quarter were down 9 percent, driven by a 6 percent decrease in rental days and a 6 percent decrease in time and mileage revenue per day, Avis Budget reported. Fleet costs, meanwhile, were up 11 percent.
Dollar Thrifty Automotive Group also reported a $72.2 million loss for the quarter, more than double the $30.6 million loss it reported in the same period of 2007. Revenue for the quarter was down 9.8 percent compared with the prior year, driven by a 6.8 percent decrease in revenue per day and a 3.2 percent drop in rental days.
The company said it expects its rental revenues to drop between 6 percent and 12 percent this year compared with 2008.