Used-vehicle prices are softening under a relentless increase in supply, largely fueled by more off-lease vehicles. But analysts for Manheim and ADESA say that the wholesale used-car market has held up quite well, thank you, despite that pricing pressure.
Try telling that to Hertz or Avis Budget.
Both rental giants released second-quarter results last week, and the blood was on the floor.
At Avis Budget Group Inc., net income collapsed 92 percent from a year earlier to $3 million, as revenue eased 0.2 percent to $2.24 billion. The company said in a press release that the profit tumble came on lower pricing and higher fleet costs, the latter mainly because of lower used-car values.
Hertz Global Holdings Inc.'s net loss widened to $158 million from $43 million a year earlier, as revenue dipped 2 percent to $2.22 billion.
One problem: In Hertz's U.S. fleet during the second quarter, net vehicle depreciation per month jumped 27 percent to $353 per unit, vs. $278 per unit in the year-earlier quarter. This was "primarily driven by declining residual values, accelerated vehicle disposition timing and fleet quality and mix investments," the company said.