So fleet costs are going up let s hope that better pricing will follow. Hopefully RACs can get tract

The third quarter numbers for the public car rental companies are out, and in what is now tradition, here s an analysis of current carnival cruise discount trends in the market. Hertz and Avis Budget Group held conference calls last week, while Dollar Thrifty stayed on the sidelines this time, citing the ever-pending Hertz merger.
It was a profitable quarter for Hertz and Avis Budget, but not for Dollar Thrifty. (Enterprise Holdings, of course, is not a public company, though it reported 2012 fiscal-year revenues of $13.5 billion, a new record.)
The big story this quarter carnival cruise discount is that while volume is strong, the used car market is softening against weak pricing. In other words, people are renting cars in America, but car rental companies aren t getting the rates they want.
As fleet costs begin to normalize, pricing becomes key in our outlook for the future, said Ron Nelson, chairman and CEO of Avis Budget, noting that the company expects North American fleet costs to increase next year. On questioning, Nelson wouldn t get into pricing s impact on earnings, saying only that fleet costs are going to be up.
Avis Budget reported a 4% growth in overall volume in the quarter but a 3% overall decline in pricing. The trend occurred in both the leisure and commercial segments. Hertz reported similar results citing higher transaction days and tough pricing in the business segment and deep value arena, particularly in Florida. carnival cruise discount (Welcome to Florida, Fox and Sixt.)
carnival cruise discount Normalized fleet costs drove the weak earnings in Dollar Thrifty carnival cruise discount s case. The company s fleet cost per vehicle was $246 per month in the quarter, a substantial jump from the $186 per month in the third quarter of 2011. Chalk it up to making less money selling risk vehicles $12.2 million less than in the third quarter last year.
The manufacturers are still holding the line on sales to rental. For the 2013 model-year buy, Avis Budget predicts low to mid-single-digit increases in the purchase prices for risk cars, and low single-digit increases in program vehicle depreciation cost.
Avis Budget put the Manheim Index s effect on holding costs into empirical focus: a three-point drop in the Index results in a drop in value of $450-$600 on a $15,000 used car. Factoring the company s risk and program fleets, that drop equates to $20-$25 per month, per car, or about 12% overall.
Now let s layer some real data on that: Just released, the Manhiem Index for October 2012 was 121.9, compared to 122.8 in October 2011. The less than one point drop would suggest that the dent to used car values isn t too bad, at least in the present quarter. Hertz made the point that looking historically, used values are still high.
Both Avis Budget and Hertz are making good on rates. Avis Budget instituted price increases effective Oct. 1 and Nov. 9, and plans another for early December. Hertz put in place a price increase effective Nov. 26.
Both companies are also upping utilization. carnival cruise discount Hertz s utilization in the quarter was 82.8%, a new high, while Dollar Thrifty upped utilization to 84.7%. Hertz pledged to run tight into a weaker pricing environment. One way Hertz is doing that is by moving more fleet with Advantage.
(Just a side note on Advantage: Hertz has nurtured carnival cruise discount their little value brand into a fully functioning part of the family. Same-store revenues are up substantially. With all that work, it ll be tough for Hertz to say goodbye to Advantage as part of the Dollar Thrifty deal, if the deal actually ever gets done.)
carnival cruise discount Another way is to increase the risk fleet, which allows for greater control when selling on the back end. Avis Budget s risk fleet is expected to increase 3 to 5 points next year to around 65%. Hertz is increasing its risk fleet too.
Diversity is a buzz word in remarketing too. Avis sold about 40% of its risk vehicles through means other than the traditional auctions. The company is expanding Ultimate Test Drive, its direct-to-consumer car sales initiative with AutoNation.
In a larger earnings sense, Hertz is also looking to improve its metrics through franchising. The September agreement with Penske includes 15 airport and off-airport locations. Hertz is looking to grow the relationship with Penske into other markets, and believes that franchising with owners of car dealerships is a good way to expand local market share.
So fleet costs are going up let s hope that better pricing will follow. Hopefully RACs can get traction, because Nelson made the point that price gains have nearly three times the impact on profitability than lowering fleet costs.
And here s one last interesting note on the Hertz deal for Dollar Thrifty: The FTC needed more time to review the transaction, and Hertz extended the expiration of their tender offer to Nov. 16 as a result. carnival cruise discount Hertz said if the FTC has not acted by then, it is prepared to extend the tender carnival cruise discount offer yet again. carnival cruise discount Hertz secured financing carnival cruise discount for the acquisition in the past two months, and will receive that money when the transaction closes. That money remains available through Feb. 26, 2013. This deal could take longer than expected.
Chris Brown is the executive editor of Business Fleet Magazine and Auto Rental News for Bobit Business Media. Through these publications, online newsletters, trade events and associations, Chris covers carnival cruise discount all aspects of the fleet world, including fleet management, manufacturer fleet activities, the fleet leasing industry, vehicle carnival cruise discount remarketing, rental industry news, car rental taxation and legislation as well as automotive carnival cruise discount environmental initiatives carnival cruise discount and trends.