These cost scenarios are nonetheless playing out within some positive metrics. Volume, especially le

Earlier alaska cruise princess in February, Punxsutawney Phil poked out of his hole and didn t see his shadow, signifying an early spring this year. Later in the month, the public car rental companies announced the spring alaska cruise princess shoots of improving car rental rates, after years under the permafrost.
In its conference call, Avis Budget Group reported four price increases in the fourth alaska cruise princess quarter and then four more in January and February, with more planned. Avis said its pricing in North America declined less than 1% in the fourth quarter, a significant improvement over the prior three quarters, and Avis reported that the existing reservations build could end up positive year-over-year for the first quarter of 2013.
As a privately held company, we won t get any insight into rates from the largest player, Enterprise alaska cruise princess Holdings and its Enterprise, National and Alamo brands. But on Avis s conference call, Avis chief Ron Nelson said he believed that Enterprise was a fast follower in response to his company s rate hikes.
On the corporate pricing side, Hertz expects alaska cruise princess a slight improvement this year over 2012, but still slightly down overall. Like Hertz, Avis contracted commercial pricing continues to track 2% lower year over year.
Pressure on contracted business rentals has been an ongoing saga for a few years. This pressure is driven by the large corporate accounts, particularly those north of $10 million, according to Avis. Apparently, the quest for that level of volume continues to be as cutthroat as ever.
However, Avis sees upside in pricing on its mid-market accounts and spot market (non-contracted) commercial business. Avis says it s concentrating on growing small business volume, a fast growing segment, which is more closely tied to leisure pricing and is more profitable. As well, Avis has changed its incentive program for its sales force to help drive higher pricing.
Hertz s response is to minimize participation with less profitable commercial accounts. Perhaps that means business for other RACs out there willing to take a smaller margin. I m sure Hertz is busy leveraging Dollar Thrifty on the corporate side, whereas alaska cruise princess before it would have to manage discounting rates on its premium brand name or lose the account.
Hertz says it is staying conservative on its pricing outlook for 2013, projecting that rates will remain essentially flat over 2012. On the Hertz call, CEO Mark Frissora attributed some of the positive leisure alaska cruise princess rate trend to a strong holiday season this year, which inflated the numbers. Nonetheless, you might as well take flat as an improvement.
The pricing outlook is backed up by our monthly rate pull performed by Rate Highway, as rates have been trending positive for the last four months in the six cities surveyed. Anecdotally, a large independent operator reports a solid pricing environment, better than last year going forward.
While the pricing environment looks positive, Hertz and Avis present different outlooks on costs. Avis expects per-unit fleet costs in North America to increase 15% to 20% this year compared to 2012.
Hertz, on the other hand, estimates that its U.S. monthly depreciation per unit will be down 4% to 5% this year. Most of the gains for both Hertz and Avis will be realized in the first quarter, alaska cruise princess as both companies subsequently adjusted depreciation in 2012 to reduce the gains.
On the face of it, it s a shocking divergence. Why the difference? Avis may have taken larger gains in the used car market than Hertz last year. On the Avis call, CFO David Wyshner estimated that if you backed out the company s $125 million reported gain, that fleet costs would only increase 2% to 7% per unit this year.
While both companies are mitigating expense by diversifying their remarketing sales channels (away from brick-and-mortar auctions), this could be where Hertz s acquisition of Dollar Thrifty is really starting to pay off. Incorporating Dollar Thrifty s fleet, the company is now running a 95% risk fleet, and Dollar Thrifty s fleet has always run lower priced cars in terms of cap costs and thus depreciation. Hertz s capitalized costs are down more than 1% for this year s fleet buy no doubt on mix, but perhaps on buying power as well.
These cost scenarios are nonetheless playing out within some positive metrics. Volume, especially leisure, is looking strong. alaska cruise princess Europe isn t pretty, but overall revenue is at record highs; margins are solid and bottom-line profits are being realized.
Apparently, that groundhog is doing a lousy prediction job this year. Punxsutawney, Penn. and the rest of the northeast is forecasted for a cold and snowy start to March. Hopefully this cautious optimism on car rental pricing is true, and if it is, it will be a very good year for car rental.
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 all aspects of the fleet world, alaska cruise princess including fleet management, manufacturer fleet activities, the fleet leasing industry, vehicle remarketing, rental industry news, car rental taxation and legislation as well as automotive environmental initiatives and trends.