Passenger Car Rental in the United States

An investor primer on NAICS 2022 code 532111 — the short-term, self-drive car-rental business (the airport and neighborhood rental counter).

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1. Overview

Passenger car rental is the business of buying cars, renting them out by the day or week, keeping them on the road as much as possible, and then selling them into the used-car market a year or two later. It sits inside the federal "Real Estate and Rental and Leasing" statistical sector (NAICS 53 — North American Industry Classification System), but it is not a real-estate business and is not organized as REITs (real estate investment trusts). The tools an investor uses to value apartments or warehouses — cap rate (capitalization rate), NOI (net operating income), FFO/AFFO (funds from operations / adjusted funds from operations) — do not apply here. The right lens is a fleet lens: how fully the cars are used, what they cost to finance, and what they are worth when sold. [1][6][11]

Why an investor should care. This is a roughly $39 billion U.S. industry [2] built on a very small, very concentrated set of operators. It is also one of the clearest live case studies in residual-value risk — the danger that an asset is worth less than expected when you sell it. Between 2020 and 2024 the same used-car prices that once handed rental firms a windfall reversed and drove multibillion-dollar losses. That volatility is the investment story.

Public vs. private ways in. Only two pure-play operators are publicly traded — Avis Budget Group (NASDAQ: CAR) and Hertz Global Holdings (NASDAQ: HTZ). The market leader, Enterprise Mobility, is privately owned and cannot be bought on any exchange. Private-market exposure is mostly indirect: franchising a brand, running a specialty or peer-to-peer fleet, or lending into the industry's asset-backed debt. There is no REIT or property-fund channel here — the underlying asset is a depreciating car, not appreciating real estate. [5][7][9]

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2. What it is, and what it is not

Scope (NAICS 532111). Establishments primarily engaged in renting passenger cars, SUVs, and light vans without a driver, generally for short periods. Economically this means daily and weekly rentals to leisure and business travelers, insurance-replacement rentals (a loaner while your car is in the body shop), airport and neighborhood counters, corporate-travel programs, and app-based car-sharing such as Zipcar. [1][6][9]

Adjacent activities that are excluded (and where they live instead):

Ownership mix. This is an institutional oligopoly, not a cottage industry. Three corporate families run roughly nine-tenths of U.S. revenue (§3). Unusually, the #1 operator is private while #2 and #3 are public. The self-employed fringe barely registers: federal nonemployer data for the broader automotive-equipment-rental group show fewer than $2 billion of receipts across ~38,000 tiny operators. [10] Note a genuine data gap, though: peer-to-peer platforms like Turo (where private car owners rent out their own vehicles) are not cleanly captured in the federal 532111 totals, so official figures understate that emerging slice of supply.

(A caveat that applies to much of NAICS 53 — that federal business statistics undercount industries dominated by small individual/pass-through owners, as with residential landlords — is largely irrelevant here. Car rental is dominated by a few large C-corporations, and the numbers below capture them well. The one real blind spot is peer-to-peer supply.)

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3. How big it is

Core federal figures (our ground-truth data):

Two things jump out. First, concentration is extreme: the four largest firms take nearly 90% of revenue, and the HHI (a standard concentration score) of ~3,029 sits well above the 2,500 threshold at which antitrust regulators label a market "highly concentrated" [2]. So the ~9,500 establishment count is misleading — a single national brand can operate thousands of branches; it does not signal a fragmented, competitive revenue pool. Second, this is a capital-intensive business: ~$38.8B of revenue on ~85,000 employees is over $450,000 of revenue per employee — the signature of a fleet-heavy, not labor-heavy, model. [2][3]

Employment is recovering with travel: County Business Patterns shows employment rising from ~78,000 (2022) to ~84,600 (2023) [3]. (A separate Census program, the Service Annual Survey, pegs 2022 revenue somewhat higher at $40.4 billion; the difference reflects survey method — we lead with the Economic Census full count of $38.8B. [4])

The asset stock that actually matters — the fleet. For a rental business, the fleet is the analog to a REIT's square footage. The U.S. rental fleet is roughly 2.0–2.3 million vehicles [6][14]. Against the ~259 million registered light-duty vehicles in the country [20], rental cars are about 0.8% of the national fleet — small in count, but each car turns over many customers a year, so its economic footprint is far larger than that share suggests (an analyst calculation, not an official penetration statistic).

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4. The investable universe

The industry is a three-family oligopoly, and only part of it trades publicly.

Approximate market values (volatile snapshots, not fundamentals): Avis has traded in the low-single-digit $ billions, Hertz roughly $1–3 billion — both far below annual revenue, reflecting heavy debt and residual-value uncertainty. [22] Company revenues are global and include non-U.S. and non-rental lines, so they cannot be added up to reconstruct the $38.8B U.S. figure.

Other exposure. Germany-listed Sixt offers foreign-listed rental exposure; Turo is the notable private peer-to-peer platform. Because two of the three leaders are public but the largest is not, the public equity market does not give you the majority of the industry — a key structural fact for anyone sizing the opportunity. [7][9][5]

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5. How the money works

The core equation. Profit per car is roughly:

(revenue per rental day × paid days) − fleet depreciation − vehicle interest − operating cost.

Everything important lives in one of those terms. [11][7]

Utilization is the "occupancy" lever. Two measures matter:

• Time utilization = rental days ÷ available car-days. An idle rental car is like a vacant apartment — it still depreciates and still carries interest. Recent utilization runs ~80–81% at Hertz and ~68–72% at Avis [9][7]. (Definitions differ between companies, so the levels aren't directly comparable.)
• Dollar utilization / per-unit metrics. Operators report RPD (revenue per rental day), RPU (revenue per unit per month), and DPU (depreciation per unit per month). Roughly, monthly RPU ≈ RPD × utilization × days. In early 2026 Americas RPD was about $66 at Avis and $57 at Hertz. [23][24]

Because demand is seasonal (summer is the profit peak) and spiky (holidays, events), operators deliberately flex the fleet up in spring and shrink it in fall to protect both utilization and pricing. [7][9]

Residual value — the single biggest swing factor. Cars are held ~1–2 years, then sold. The assumed resale price sets the depreciation expense, so a move in used-car prices moves earnings violently even when rental revenue is flat. Firms manage this two ways:

• Program (repurchase) vehicles: the manufacturer (OEM — original equipment manufacturer) contractually agrees to buy the car back at a set price, handing residual risk back to the OEM.
• Risk vehicles: the rental company keeps the resale risk and sells the car itself. Today the large majority of the U.S. fleet is risk vehicles — roughly 84–90% at Avis in recent years — which is exactly why used-car prices flow straight into profits. [7][6]

Fleet financing — ABS, not mortgages. The debt analog to a property mortgage is rental-fleet asset-backed securities (ABS): operators pledge the cars and their cash flows into bankruptcy-remote entities that issue rated bonds. Avis alone carried about $19.2 billion of vehicle-program (mostly ABS) debt plus $6.1 billion of corporate debt at year-end 2025 [7]. This makes the model doubly interest-rate-sensitive: higher rates raise borrowing cost and cool car demand, which depresses the residual values the debt is secured against. ABS structures also carry collateral tests that can force the operator to sell cars and divert the proceeds to bondholders precisely when it needs liquidity — the mechanism that helped push Hertz into bankruptcy in 2020. [7][11][18]

Why the REIT framework is the wrong tool. These are C-corporations. There is no pass-through taxation, no ~90%-of-taxable-income distribution rule, and FFO/AFFO are not the earnings measure — because a car genuinely wears out and must be replaced, you cannot add depreciation back the way a REIT does with a building. The real metrics are Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), free cash flow after fleet spending, and the per-unit stats above. In 2024, both majors posted positive EBITDA but huge net losses — the gap was almost entirely fleet depreciation and impairment, underscoring that here the asset-value line is the story. [6][7][8]

(A note on 533110, the adjacent brand-licensing code: when a rental firm licenses its brand to an independent operator, it collects a small percentage royalty — Avis disclosed Budget-brand license royalties of only ~1% of that brand's revenue — an asset-light, high-margin stream, but a tiny one next to owning and running the fleet. [7])

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6. What drives demand

1. Air travel. Roughly two-thirds of revenue is on-airport, so demand tracks passenger enplanements closely; the post-COVID travel rebound drove the 2022–2024 recovery. [8][9][24]
2. Leisure vs. business mix. Leisure rentals are longer and higher-revenue per trip; summer (Q3) is the earnings peak. [8][7]
3. Insurance and dealer replacement. Loaners while a car is repaired — a steadier, more recurring, off-airport base (Enterprise's historical stronghold). [7]
4. New-vehicle supply and price. Fleets must be bought before they can be rented; the 2021–22 semiconductor shortage constrained supply and lifted rates. [14]
5. Used-car demand. The exit side — strong used prices raise disposal proceeds and cut effective depreciation. [12]
6. Macro cycle. GDP, employment, and discretionary/corporate travel budgets.
7. Substitutes. Ride-hailing takes short urban trips; peer-to-peer (Turo) fragments the edges — but multi-day, destination, and airport rentals remain the durable core. [9]

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7. Regulation

The real-estate sector's rules (zoning, rent control, REIT tax) are irrelevant here. The binding constraints are:

• Airport concessions. Airports auction the right to operate for a concession fee — typically a percentage of qualifying revenue (a Seattle-Tacoma example is the greater of 10% of gross sales or a guaranteed minimum) — plus a minimum annual guarantee (MAG) that behaves like fixed rent in a downturn, and customer facility charges (CFCs) levied on renters to fund shared facilities. Scarce, competitively bid airport slots are a real barrier to entry. [7][15]
• Liability shield. The Graves Amendment (49 U.S.C. §30106) generally protects a rental company from being sued purely because it owned the car, provided it was not itself negligent — a meaningful legal protection for the business model. [18]
• Safety recalls. Federal law bars renting or selling a vehicle under an open safety recall until it's fixed, which pulls cars out of rentable service. In early 2026 Hertz estimated elevated recalls cut its quarterly EBITDA by over $25 million. [19][24]
• Consumer protection. State and federal scrutiny of "drip pricing," mandatory fees, and optional loss-damage-waiver (LDW) sales.
• Antitrust. Further consolidation among the big three would face intense review — the FTC forced divestitures at dozens of airports before allowing Hertz to buy Dollar Thrifty in 2012. [16]
• Emissions / EV policy shapes fleet-purchase economics and residual values (see the EV episode in §8).

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8. Competitive dynamics and consolidation

Decades of mergers built today's three-family structure: Enterprise absorbed National and Alamo, Hertz bought Dollar Thrifty (2012), and Avis acquired Budget (2002) and Zipcar (2013). The FTC found the majors controlled ~98% of U.S. airport rentals in 2012 — and our 2022 concentration data (CR4 89.6%, HHI ~3,029) confirm the oligopoly persists. [16][2]

Where scale wins: vehicle-purchasing power with OEMs, access to the ABS debt markets, airport concession portfolios, one-way networks, loyalty databases, and corporate/insurance contracts — all hard for a newcomer to replicate. [7][11]

The decisive short-run variable is fleet discipline. If every operator over-orders into the same optimistic demand forecast, utilization falls, discounting rises, and everyone dumps cars into a weakening used market at once — a self-reinforcing downturn. Since 2020 the majors have emphasized right-sizing over share-grabbing, a more disciplined posture than the pre-2020 era. [8][9]

Disruption at the edges: peer-to-peer (Turo), car-sharing, and ride-hailing chip at niches and cap pricing power, but none has displaced the airport core. And financial fragility is itself competitive — Hertz's 2020 bankruptcy and 2024 losses handed pricing latitude to healthier Enterprise and Avis. [9][11]

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9. Risks

A) Residual-value risk (the defining risk). With most of the fleet on "risk" terms, earnings swing with used-car prices. The 2020–2024 cycle is the textbook case: the Manheim Used Vehicle Value Index spiked ~47% in 2021, turning car disposals into a windfall (per-unit depreciation fell to unusually low levels), then reversed — used prices fell, holding periods shortened, and depreciation exploded. Hertz took a ~$1.0B impairment and a ~$2.9B net loss in 2024; Avis swung to a ~$1.8B net loss despite positive EBITDA. Avis logged ~$2.47B of fleet impairment/charges in 2024 and another $518M of EV-specific charges in 2025. [12][6][7][8]

B) The EV overlay. Hertz's high-profile 2021–22 bet on a large Tesla/EV fleet backfired as EV resale values fell faster than gas cars and repair costs ran high — a cautionary tale about forecasting residuals on new technology. [7]

C) Interest-rate sensitivity (two channels). Higher rates raise ABS and corporate borrowing costs and depress the used-car values that secure the debt — hitting the interest line and the depreciation line at once. Avis warned that refinancing its debt at higher rates would hurt results. [7][11]

D) Leverage / thin equity. Avis ended 2025 with negative $3.1 billion of book equity against $25.3 billion of debt [7]. ABS creditors have first claim on the cars, so a residual shock can wipe out shareholders even while the secured lenders stay whole. This is the fragility that shows up as bankruptcy risk in a downturn.

E) Demand cyclicality. Two-thirds airport revenue means a travel shock (pandemic, recession, fuel spike) hits volume and price together — 2020 was the extreme. [8][12]

F) Cost pass-through. Rising airport concession fees, MAGs, insurance, and rental-excise taxes squeeze margins if they can't be pushed onto customers. [7]

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10. How to invest, and outlook

Public-market routes.

• Listed equity: Avis Budget (CAR) and Hertz (HTZ) are the only pure-plays; Enterprise is unavailable. Value them on normalized EBITDA, free cash flow after fleet spending, per-unit trends (RPD/RPU/DPU), and net debt — not dividend yield or FFO. Neither pays a regular dividend; the equity is a leveraged, cyclical bet on used-car prices and travel demand, with high upside and high wipe-out risk. [7][9]
• Fixed income: the deepest, most-collateralized way to own the industry's cash flows is its rental-fleet ABS — rated, senior, secured, and available to bond investors. [11]
• Indirect: foreign-listed Sixt; and second-order exposure via OEMs, used-car auction platforms, and travel distributors.

Private-market routes. Running a competitive rental company from scratch is largely inaccessible (fleet capital + ABS access + airport slots). Realistic private plays are franchising a major brand, specialty/exotic/van fleets, peer-to-peer hosting (Turo), buying/rolling up a regional operator, private credit into fleet financing, or owning a branch/lot leased to an operator (a real-estate exposure to rent, not to rental rates). There is no stabilized-yield fund analog as in real estate — because the asset is a depreciating car, the logic is turnover-and-residual, not rent-and-appreciate. [7][9]

Outlook. After the 2023–24 residual shock, operators are shrinking and rotating fleets to normalize depreciation and defend pricing. 2025 showed clear improvement but not yet clean profitability — Avis posted a $995M net loss and Hertz a $747M net loss on ~81% utilization; both stayed loss-making into Q1 2026 even as rates and per-unit fleet costs improved [7][9][23][24]. Trade forecasts see U.S. revenue edging toward the low-$40-billions [14].

The base case (a forward-looking judgment): a gradual, disciplined recovery — stable-to-improving margins if used-car values hold. The bull case is that firm travel demand, restrained fleets, and steady residuals expand revenue-per-unit while depreciation-per-unit compresses — and because leverage is high, equity upside could be outsized. The bear case is the industry's characteristic correlated downturn: a recession or travel shock meets fleet oversupply, and firms defleet into a falling used-car market while refinancing costs rise — most dangerous at the more leveraged Hertz. The single discipline that matters for an investor: separate genuine rental-operating improvement from used-car-market luck. A firm that earns acceptable returns at conservative residuals is a real operator; one whose case needs perpetual disposal gains is just a leveraged bet on used-car prices. [7][9][12]

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Sources

1. U.S. Census Bureau, 2022 NAICS Definition: 532111 Passenger Car Rental, 2022. https://www.census.gov/naics/?input=532111&year=2022&details=532111
2. U.S. Census Bureau, 2022 Economic Census, Table EC2253BASIC & concentration tabulation (revenue $38,771.6M; 2,190 firms; CR4 89.6%, CR8 91.6%, CR20 93.4%, CR50 95.5%; HHI 3,029), released 2024–2025. https://data.census.gov/table/ECNBASIC2022.EC2253BASIC
3. U.S. Census Bureau, County Business Patterns 2023 (9,548 establishments; 84,637 employees; $4,246.4M payroll; 2022 employment 78,075), 2025. https://www.census.gov/programs-surveys/cbp/data/datasets.html
4. U.S. Census Bureau / FRED, Total Revenue for Passenger Car Rental, Employer Firms (Service Annual Survey; 2022 revenue $40.43B; 2019 $33.66B; 2020 $24.70B; 2021 $32.97B), 1998–2022. https://fred.stlouisfed.org/data/REVEF532111ALLEST
5. Enterprise Mobility, Fact Sheet / FY2024 Results (global revenue >$38B; ~2.4M vehicles; 9,500+ locations, 90+ countries), 2024. https://www.enterprisemobility.com/
6. Hertz Global Holdings, 2023 & 2024 Form 10-K, SEC EDGAR (U.S. fleet ~2.0M est.; 2024 total revenue $9,049M; revenue-earning-vehicle depreciation +77% to $3,611M; $1.0B impairment). https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=1657853
7. Avis Budget Group, 2024 & 2025 Form 10-K, SEC EDGAR (2024 revenue $11,789M, net loss $1,821M, Adjusted EBITDA $628M; 2025 revenue $11,652M, net loss $995M, Adjusted EBITDA $748M; ~684,000 avg fleet; ~84% risk vehicles; $19.2B vehicle debt + $6.1B corporate debt; negative $3,116M equity; Budget license royalties ~1% of brand revenue), 2025–2026. https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=723612
8. Hertz Global Holdings, Q4 & Full-Year 2024 Results (Americas RAC $7.4B, utilization 80%, RPU ~$1,449/mo, DPU ~$460/mo; total fleet 530,679; Adjusted Corporate EBITDA ~−$1.5B; net loss ~$2.9B), Feb. 2025. https://ir.hertz.com/
9. Hertz Global Holdings, 2025 Form 10-K & Q4 2025 Results (revenue ~$8.5B; net loss $747M; 81% utilization; DPU $300; avg global fleet ~516,900), 2026. https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=1657853
10. U.S. Census Bureau, 2022 Nonemployer Statistics, NAICS 5321 (37,891 establishments; $1,954.7M receipts), 2024. https://www.census.gov/programs-surveys/nonemployer-statistics.html
11. Avis Budget Group / Hertz Global Holdings, SEC filings on rental-fleet asset-backed securities (AESOP; Hertz Vehicle Financing III), 2024–2026. https://www.sec.gov/
12. Cox Automotive, Manheim Used Vehicle Value Index (Dec. 2021 reading 236.2, +46.6% y/y; subsequent decline), 2022–2024. https://www.coxautoinc.com/market-insights/
13. U.S. Bureau of Labor Statistics, CPI, Used Cars and Trucks (+37.3% in 2021; −8.8% in 2022), 2022–2023. https://www.bls.gov/cpi/
14. Auto Rental News, U.S. Car Rental Revenue and Fleet (2024 revenue ~$39B; 2025 projected ~$40.6B; fleet purchases 1.04M→1.16M), 2025. https://www.autorentalnews.com/
15. Port of Seattle, Rental Car Revenue Reports (concession = greater of 10% of gross sales or minimum guarantee), accessed 2026. https://www.portseattle.org/page/rental-car-revenue-reports
16. Federal Trade Commission, FTC Requires Divestitures for Hertz's Acquisition of Dollar Thrifty (~98% of U.S. airport rentals held by majors in 2012; 29 airport divestitures), 2012. https://www.ftc.gov/news-events/news/press-releases/2012/11/ftc-requires-divestitures-hertzs-proposed-23-billion-acquisition-dollar-thrifty-preserve-competition
17. U.S. Small Business Administration, 13 CFR §121.201 Small Business Size Standards (NAICS 532111 = $47.0M avg annual receipts), 2023. https://www.ecfr.gov/current/title-13/part-121/section-121.201
18. Cornell Legal Information Institute, 49 U.S.C. §30106 — Graves Amendment, current statute. https://www.law.cornell.edu/uscode/text/49/30106
19. Cornell Legal Information Institute, 49 U.S.C. §30120 — Recall Remedies (Safe Rental Car Act), current statute. https://www.law.cornell.edu/uscode/text/49/30120
20. Federal Highway Administration, Highway Statistics 2023, Table VM-1 (~259.2M registered light-duty vehicles), 2025. https://www.fhwa.dot.gov/policyinformation/statistics/2023/vm1.cfm
21. Nareit / IRS, Funds From Operations (FFO/AFFO) and REIT 90% distribution rule (Form 1120-REIT), accessed 2026. https://www.reit.com/glossary/funds-operation-ffo
22. Macrotrends / StockAnalysis, Hertz (HTZ) and Avis Budget (CAR) market-capitalization data (volatile snapshots; approximate), 2025–2026. https://www.macrotrends.net/stocks/charts/HTZ/hertz-global-holdings/market-cap
23. Avis Budget Group, First-Quarter 2026 Results (revenue $2.5B; net loss $234M; Americas RPD $66.62; utilization 70.0%; per-unit fleet cost $380/mo), 2026. https://ir.avisbudgetgroup.com/
24. Hertz Global Holdings, First-Quarter 2026 Results (revenue $2.0B, +11%; net loss $333M; 79% utilization; DPU $312; Americas RPD ~$57.00; airports 68% of Americas revenue; recall EBITDA impact >$25M), 2026. https://ir.hertz.com/
25. Federal Aviation Administration, Passenger Boarding (Enplanement) Data for U.S. Airports, updated 2026. https://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger