November Manheim Better Than Expected

Travel & Leisure: Car Rental | Christopher Agnew, CFA, Managing Director | Dec. 5, 2014 (Read Report)

Manheim Stronger in November. Manheim Index reading of 123.3 in November exceeded expectations. The reading increased 0.7% y/y and 1.2% sequentially from 121.8 in October. The November reading was ahead of our mid-month estimate expectation of 121.8-123.0. With Hertz (HTZ, Buy, $24.25, $31 PT) actively refleeting, we believe this is a positive data point for car rental industry.

Rental Risk Unit Trend Improved; Encouraging Given Headwind. Rental Risk units (unadjusted) declined 2.4% y/y compared to 6.1% decline in October. The adjusted data also improved sequentially, but was still down y/y (no data provided). October’s decline, it appears now, was exaggerated by heavy volumes and a greater mix of lower quality vehicles. November volumes moderated and November was the lowest volume month of the year. Average mileage was a record 45,415 miles as HTZ rotates out its older fleet. We believe HTZ is selling the majority of its vehicles through alternative channels. (Read more)