FleetEurope — 2025-04-04
Automotive Industry
Europe’s vehicle rental companies are reporting lower profits due to lower than anticipated prices for used rental vehicles sold into the second-hand market.
Buoyed by strong demand and by its continued international expansion, Sixt in its recent annual report recorded turnover rising to more than €4 billion in 2024, a third consecutive year of record sales. However, pre-tax profits fell to €335 million in 2024. That is lower than earlier, more optimistic forecasts. In 2023, the company achieved a pre-tax profit of €464 million.
One key factor in the reduced profitability is the significant drop in resale values for ex rental vehicles. Had those RVs had remained at 2023 levels, pre-tax profits would have been almost €100 million higher.
Reduced profitability applies especially to used EVs, which have faced higher depreciation rates in a sluggish used vehicle market. This is exacerbated by the rapid turnover of Sixt’s EV fleet to maintain a modern lineup.
Other rental companies face similar challenges. While Europcar has not yet released full 2024 earnings, mid-year reports indicated a similar struggle with declining used car values. Europcar’s strategy of returning most of its fleet to OEMs after just four to six months may mitigate some losses, but the broader market downturn remains a factor.
Hertz also felt the pinch. In its global Q3 2024 earnings report, the company highlighted a $1 billion hit to its bottom line, largely due to depreciation costs and weak used car prices. While much of this impact stemmed from Hertz’s U.S. operations, the company’s European arm reported similar pressures. Hertz’s aggressive push into EVs, followed by a pivot to sell off thousands of Teslas at reduced prices, underscores the limited appetite for rental EVs, and the volatility of the used EV market.
Europe’s softening used car prices have several causes. To a large extent, they’re still re-adjusting after a post-pandemic boom in demand drive prices to record highs in 2021 and 2022. Since then, supply chains have stabilized and new vehicle production has ramped up, giving consumers more options, and driving down prices.
At the same time, consumer concerns over battery state of health, the lack of affordable public charging options, and the lack of government subsidies for used EV purchases, has depressed demand for used EVs.
According to a recent survey by AutoScout24, used BEV prices across key European markets declined by 17% in 2024, while overall used car prices went down by just 6%.
In light of the broader readjustment of used vehicle prices, it is unlikely that rental companies (or indeed leasing companies, and other large defleeters) can soon count on the second-hand market again as a profit driver. Instead, they must prioritize operational efficiency and fleet flexibility as the main means to drive profit.
Companies like Sixt and Europcar, with high profiles, strong brand loyalty, and increasingly powerful digital platforms, are better positioned to weather this storm that most smaller operators.
A recent partnership deal between Sixt and Stellantis points to a changed attitude towards used rental vehicle remarketing. The deal commits Sixt to purchase up to 250,000 vehicles over three years, and includes provisions for the manufacturer to buy back a significant portion of the fleet, shielding Sixt from unexpected drops in resale values.