CAR Car Rental · Travel · Fleet operator · Cyclical · Thesis updated June 14, 2026

Better fleet math, still a hard balance sheet

Q1 2026 revenue was $2.5 billion, but the company still posted a $234 million net loss.
Adjusted EBITDA loss widened to $113 million, even as revenue per day rose 3%.
Vehicle utilization hit a record 70.1%, a sign that Avis is using its fleet more tightly.
Management says monthly depreciation rates began to fall late in Q1, which is the key profit test for 2026.
The Waymo Dallas partnership and Avis First add optional upside, but their profit model is still unclear.

01 Running thesis

The turn depends on fleet costs

Avis Budget is trying to prove that its worst fleet cost pain is behind it. Q1 2026 looked mixed on the surface. Revenue rose, revenue per day rose 3%, and vehicle utilization reached a record 70.1%. But Adjusted EBITDA, a profit measure that removes interest, taxes, depreciation, amortization, and some company adjustments, was still a $113 million loss.

The bull case is simple. If tighter fleet control keeps cars rented more often and at better prices, lower depreciation can flow through quickly in the busier travel quarters. Management said monthly depreciation rates for the Americas fleet began to decline sharply near the end of Q1 and should help EBITDA later in the year.

The bear case is that the costs do not fall fast enough. Operating expenses, selling costs, administrative costs, and vehicle interest costs all weighed on Q1. If those costs are the new normal, better pricing may not be enough.

Finn's view stays cautious. The operating signs are better, but the company still has weak financial health and a demanding valuation setup. Q2 and Q3 need to show that the better fleet math turns into real profit.

Apr 2026▲Q1 2026 showed better operating signals, with revenue per day up 3% and vehicle utilization at a record 70.1%. The loss was still wider, so the next test is whether lower depreciation turns those signals into EBITDA.

Feb 2026→The 2025 10-K confirmed lower per-unit fleet costs helped the year, especially outside the Americas. It also added a $518 million EV-related impairment and made the Waymo Dallas launch a clearer 2026 catalyst.

Oct 2025▲Q3 2025 filings showed higher Adjusted EBITDA in both Americas and International, mainly from lower per-unit fleet costs. That raised confidence that the fleet rotation was working.

Jul 2025▲Q2 2025 results gave stronger proof that lower fleet costs were helping EBITDA. Management also introduced Avis First and the Waymo partnership, adding longer-term options.

Jul 2025▼The same Q2 call added near-term supply concerns, including OEM delivery delays and a recall affecting 4% of the Americas fleet. Those issues could limit peak-season fleet availability.

May 2025▲Q1 2025 management commentary said per-unit fleet costs came in better than expected and that no further charges were expected from that fleet strategy shift. That strengthened the cost-recovery story at the time.

May 2025▼The Q1 2025 filing showed a large net loss tied to more than $390 million of fleet-related charges. The plan was moving, but the cost of the reset was high.

02 Business model

Rent cars, manage the resale risk

Avis Budget makes most of its money by renting vehicles to leisure and business customers through the Avis and Budget brands. Customers pay daily rental fees. Many also buy add-ons such as damage waivers, liability coverage, and convenience services.

The hard part is the fleet. Avis buys or leases vehicles, rents them out, then sells or rotates them. Profit depends on the rental price, how often each car is used, interest costs on vehicle financing, and the resale value of the car when Avis is done with it.

In Q4 2024, the company moved faster to dispose of higher-cost model year 2023 and 2024 vehicles. In Q4 2025, it shortened the useful life of certain U.S. electric rental vehicles and recorded a $518 million impairment charge. These charges show how costly a fleet mistake can be.

Avis is also testing ways to stretch the model. Avis First is a premium concierge rental service. The Waymo partnership in Dallas would put Avis in the business of managing autonomous vehicle fleets for ride-hailing.

03 Product portfolio

Brands, add-ons, and new bets

Cash cow

Avis

Avis is the main brand for higher-service car rental customers, including business and premium leisure travelers. Its pricing power matters because revenue per day is one of the key profit levers.

Cash cow

Budget

Budget serves more value-focused renters. It gives the company scale across airports, local markets, and price-sensitive travel demand.

Steady

Ancillary products

Damage waivers, supplemental liability insurance, and other add-ons increase revenue per rental. These products can help margins when rental pricing is under pressure.

Growth engine

Avis First

Avis First is a premium, concierge-style service with newer, lower-mileage vehicles and curb-side service. Management planned availability in over 50 markets by the end of 2025.

Steady

Customer app and direct bookings

The company launched a new customer app in October 2024 to increase direct reservations. Direct bookings can reduce dependence on third-party channels.

Option

Waymo fleet operations

Avis plans to support Waymo's autonomous ride-hailing service in Dallas, with an initial public launch planned for 2026. The opportunity could be large, but the financial terms are not yet clear.

04 Business segments

Mostly Americas revenue

Americas78%modest

International22%modest

Segment mix is based on Q1 2026 revenue: Americas revenue was $1.96 billion and International revenue was $568 million. The Americas segment is the main profit swing factor because it is much larger and carries major fleet cost exposure.

05 Risk factors

What could break the turn

Depreciation tailwind fails

High impact · Medium odds

Management has pointed to falling monthly depreciation rates as the main reason EBITDA should improve. If used car values weaken or vehicle holding costs stay high, that benefit may not arrive. This would call the whole fleet rotation plan into question.

We watchTrack per-unit fleet costs and monthly depreciation commentary in Q2 and Q3 2026.

Costs offset better pricing

High impact · Medium odds

Q1 revenue per day improved, but the company still had a wider Adjusted EBITDA loss. The filing cited higher operating expenses, selling and administrative costs, and vehicle interest costs. If those do not ease, revenue growth may not convert to profit.

We watchWatch whether consolidated Adjusted EBITDA returns to positive territory in Q2 2026.

Used car market volatility

High impact · Medium odds

Avis depends on selling vehicles at decent prices after renting them. Faster fleet rotation increases near-term exposure to resale prices. The $518 million EV-related impairment in 2025 shows how quickly asset values can hurt reported results.

We watchWatch gains or losses on vehicle sales and any new fleet impairment charges.

Interest costs stay heavy

Medium impact · High odds

Avis uses vehicle-backed and corporate debt to finance its fleet and business. Higher rates raise the cost of holding cars. In Q1 2026, vehicle interest costs were one reason the Americas Adjusted EBITDA loss widened.

We watchMonitor vehicle interest expense and refinancing commentary in quarterly filings.

Fleet supply disruptions

Medium impact · Medium odds

In Q2 2025, management said tariff uncertainty was delaying OEM production and delivery. It also described a recall affecting 4% of the Americas fleet, including high-revenue vans and minivans. The 2025 10-K did not give a clear update on these exact issues.

We watchLook for updates on OEM delivery timing, recall resolution, and unavailable vehicles.

New bets lack profit details

Medium impact · Medium odds

Avis First and the Waymo Dallas partnership could expand the business beyond standard car rental. But investors still do not know the target mix, margins, or contract economics. If these projects add complexity without profit, the upside case weakens.

We watchWatch for Avis First margin data and Waymo revenue or EBITDA contribution after launch.

06 Quick answers

In one breath

How does Avis Budget make money?

Avis Budget rents vehicles through Avis and Budget and sells add-on products like damage waivers. It also tries to profit from managing the fleet well, which means buying, using, and selling vehicles at the right time.

Why is fleet depreciation so important for CAR stock?

Depreciation is the loss in value of a vehicle while Avis owns or leases it. When that cost rises, rental profits can disappear fast, even if demand is decent.

What changed in Q1 2026?

The quarter still showed a $113 million Adjusted EBITDA loss. But revenue per day rose 3%, utilization reached 70.1%, and management said monthly depreciation rates began to fall late in the quarter.

What is the Waymo partnership?

Avis plans to provide fleet operations for Waymo's autonomous ride-hailing service in Dallas. The initial public launch is planned for 2026, but the revenue and profit contribution are not yet disclosed.