How Profitable are Car Rental Companies: 5,200+ Real Company Data

In this analysis, we have looked at 6 of the most popular and largest car rental franchises to find how profitable are the individual car rental companies under which they operate.
As you would expect, revenue is very much a function of the type and the number of the vehicles of the fleet. As for the cost to start such a business, about 80 to 90% of the startup costs are the vehicles themselves.
We will look at 2 main questions in this analysis:
- How Much Revenue Does a Car Rental Business Make?
- How Much Does It Cost to start a Car Rental Company?
Let’s dive in!
How Much Revenue Does a Car Rental Business Make?
When evaluating how much revenue a car rental company can make, using data from established car rental franchises can provide valuable insights.
Here is the detailed data from 2 large car rental franchises:
Franchise | Average Yearly Revenue |
---|---|
Priceless Car & Truck Rental | $235,000 |
U-Save Car and Truck Rental | $940,000 |
On average, a car rental company makes anywhere between $235,000 to $940,000 in yearly revenue per year. This is quite a gap. So why is that?
First, not all franchises disclose revenue. Only 2 actually, which represents about 100 car rental companies (vs. the 5,200+ car rental franchised companies including Hertz, Avis and more as we will look into later in this analysis).
Second, as you would imagine, car rental companies turnover depends mostly on… well the number of vehicles.
For example, Priceless car rental companies operates with 20 vehicles on average. This explains why a car rental business makes on average ‘only’ $240,000. That’s even clearer when looking at their utilization rate as well as monthly revenue per car below:
How Much Does It Cost to start a Car Rental Company?
Before we dive into the numbers, let’s first make something clear here: asking how much starting a car rental company requires segmenting the question into 2 variables:
- How much does it cost to acquire the vehicles?
- How much does it cost to pay for all other startup costs?
If not, answering this question would make no sense. Want proof? Have a look at the numbers below.
These are the low and high estimates investments you would have to make (startup costs) to start some of the most popular and largest car rental franchises in the US. Together, they represent about 5,200 individual car rental businesses:
Franchise | Low investment | High investment |
---|---|---|
Payless Car Rental | $606,000 | $1,568,000 |
Priceless Car & Truck Rental | $333,925 | $957,037 |
U-Save Car and Truck Rental | $165,000 | $1,520,000 |
HERTZ | $879,000 | $15,839,000 |
Avis Rent a Car | $606,000 | $1,568,000 |
Yes, the investment required to start these car rental franchises vary significantly. There’s an obvious reason for that, as explained earlier: it does include some cost for the acquisition of the vehicles themselves.
So let’s now try to see what it looks like without the acquisition cost of the vehicles (both the passenger and courtesy vehicles). In other words, how much it costs to start a car rental company with all the startup costs paid for (equipment, building, marketing, hardware, legal, etc.) excluding the cost of the vehicles themselves.
Franchise | Low investment | High investment |
---|---|---|
Payless Car Rental | $155,500 | $278,400 |
Priceless Car & Truck Rental | $33,925 | $157,037 |
U-Save Car and Truck Rental | $65,000 | $220,000 |
HERTZ | $74,000 | $389,000 |
Avis Rent a Car* | $155,500 | $278,400 |
* Avis owns Payless and offers the same franchise terms
These numbers make much more sense now. On average, it costs between $60,000 to $400,000 to start a car rental company. Still a wide range? Let’s have a look at an example now.
Startup Costs: Priceless Car & Truck Rental
Certainly! Here is the table with only the first three columns and without the footnotes:
Type of Expenditure | Low Amount | High Amount |
---|---|---|
Lease Deposit | $2,500 | $25,000 |
Real Estate | $6,000 | $24,000 |
Leasehold Improvements | $2,000 | $12,000 |
Equipment, Fixtures, Furniture and Signs | $2,000 | $20,000 |
Training and Travel Expenses | $1,000 | $2,000 |
Computer Hardware | $1,550 | $14,130 |
Computer Software | $375 | $6,407 |
Additional Onsite Computer Software Training | $0 | $3,500 |
Opening Advertising, Deposits, and Miscellaneous Costs | $2,500 | $5,000 |
Additional Funds – 3 months operating capital | $15,000 | $45,000 |
TOTAL | $33,925 | $157,037 |
Fleet | $300,000 | $800,000 |
TOTAL INCLUDING FLEET | $333,925 | $957,037 |
Note that the cost to acquire the fleet assumes 20 vehicles at a cost of $15,000 (low estimate) up to $40,000 (high estimate) per vehicle.
Car Rental Startup Costs
Let’s now have a look at an hypothetical list of startup costs you can expect for a medium-sized car rental company with 20 vehicles, similar to the example of Priceless Car & Truck Rental above:
Lease Deposit
- A deposit required to lease the warehouse / building required for the operations
- Range: $2,500 – $25,000
Real Estate
- Costs associated with securing a physical location for your business operations.
- Includes rent or lease payments for office space, rental lot, etc.
- Range: $6,000 – $24,000
Leasehold Improvements
- Expenses for modifying and customizing the leased property to meet business needs.
- Can include interior renovations, installing counters, customer service areas, and other necessary alterations.
- Range: $2,000 – $12,000
Equipment, Fixtures, Furniture, and Signs
- Costs for acquiring all necessary equipment such as computers, phones, and office supplies.
- Includes furniture for the office and customer waiting areas, as well as business signage.
- Range: $2,000 – $20,000
Rental Vehicles
- The cost of purchasing or leasing a fleet of vehicles for rental purposes (assuming 20 vehicles of $15,000 to $40,000 in value each)
- Includes a variety of vehicle types to meet different customer needs, such as sedans, SUVs, and luxury cars.
- Range: $300,000 – $800,000
Training and Travel Expenses
- Costs for training staff on business operations, customer service, and vehicle maintenance.
- Includes expenses for travel and accommodation if training is conducted off-site.
- Range: $1,000 – $2,000
Computer Hardware
- The expense for purchasing computers, servers, and other necessary hardware.
- Ensures smooth operation of reservation systems, customer databases, and other business software.
- Range: $1,550 – $14,130
Computer Software
- Costs for essential software programs needed to run the business efficiently.
- Includes reservation management systems, accounting software, and customer relationship management (CRM) tools.
- Range: $375 – $6,407
Additional Onsite Computer Software Training
- Expenses for further training on the use of business software.
- Helps ensure staff are proficient and can utilize software to its full potential.
- Range: $0 – $3,500
Opening Advertising, Deposits, and Miscellaneous Costs
- Initial marketing and advertising expenses to promote your business launch.
- May include online ads, local media placements, promotional materials, and business deposits.
- Range: $2,500 – $5,000
Vehicle Insurance
- The cost of insuring the rental fleet against accidents, theft, and damage.
- Vehicle insurance ensures that you are financially protected in case of any incidents involving rental vehicles.
- Range: $10,000 – $20,000
Additional Funds – 3 Months Operating Capital
- Funds needed to cover operating expenses for the first three months.
- Includes salaries, utilities, marketing, and other operational costs to keep the business running smoothly during the initial phase.
- Range: $15,000 – $45,000