It's quickly become clear that the emergence of ride-hailing services like Uber and Lyft are forcing traditional car rental services to adapt.
Hertz Global Holdings, Inc. and Avis Budget Group, Inc. both reported lackluster second quarter results this week, raising some concerns regarding the state of the rental car industry.
Hertz reported total revenues for the three-month period ending in June of $2.2 billion, a two percent decline from the same period in 2016.
"We have made significant progress in the first half of the year, executing on our operating turnaround plan. Of course, the hard work always comes before the pay off as reflected in our second quarter results, where increased spending to fix areas of weakness and invest in areas of opportunity were exacerbated by a challenging vehicle residual environment in the U.S.," said Hertz President and CEO, Kathryn V. Marinello, in a statement.
"Admittedly, we still have a lot of work to do, but these early wins are evidence that we have the right plan in place to ultimately achieve best-in-class outcomes."
Meanwhile, Avis Budget Group also reported second quarter revenue of $2.2 billion, which was unchanged from the same period last year.
Avis' second quarter adjusted earnings per share came in at $0.30, a dramatic dropoff from analyst estimates forecasting $0.51 per share. The company also lowered its full-year earnings guidance.
The disappointing results prompted Avis' shares to drop by nearly 10 percent on Tuesday, Zacks.com reported.
"Our second quarter results in the Americas reflected both a 4 percent reduction in pricing resulting from industry over-fleeting and higher per-unit fleet costs due to lower used-vehicle values," said Avis President and CEO, Larry De Shon, in a statement.
"Consequently, we have identified $25 million of additional savings opportunities globally, bringing our total expected savings this year to $75 million, and have lowered our full-year earnings guidance to reflect the difficult first half."
However, De Shon said he's optimistic that issues plaguing the industry of late are in the rearview mirror.
"Our recently announced partnerships with both Waymo and RocketSpace are providing opportunities to pilot scalable new business models as we start to execute on our strategy to leverage our fleet management and logistics capabilities in the rapidly developing mobility space," De Shon added.
"I'm also excited about all of the innovative growth initiatives we've announced this year, including enabling Avis customers to transact with us through Amazon Alexa and Google Home."
[READMORE]READ MORE: You Can Soon Rent Avis Cars via Amazon Alexa[/READMORE]
The companies' discouraging second quarter 2017 results come on the heels of the release of travel expense management software provider Certify's SpendSmart report, which analyzed business travel spending from April through June.
According to the report, Uber and Lyft both picked up two percent of overall ground transportation, while the car rental industry dropped three percent. Uber claimed 55 percent of ground transportation overall, compared to 29 percent for the car rental industry.
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