The car rental market saw a major rebound in demand this year. Prominent players Avis Budget Group (NASDAQ:CAR) and Hertz (HTZ) are expected to benefit from increased pricing power and demand. But let’s find out which of these stocks is a better buy now.Avis Budget Group, Inc. (CAR) and Hertz Global Holdings (OTC:HTZGQ), Inc. (HTZ) are two prominent rental and leasing services companies. CAR provides luxury cars, specialty-use vehicles, light commercial vehicles and truck rentals, car sharing, and ancillary services to businesses and consumers. It also offers optional insurance products and coverages, fuel service options, roadside assistance services, and an online portal for corporate travel. HTZ provides vehicle rental services under the Hertz, Dollar, and Thrifty brands from company-owned, licensee, and franchisee locations internationally. It also sells vehicles and operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets.
The pandemic-imposed lockdowns and travel restrictions crushed the demand in the car rental market last year, as U.S. car rental industry revenue declined 27.4% year-over-year in 2020. However, the industry rapidly recovered this year, owing to a strong vaccination drive, an increase in new car prices, and a growing interest in sustainability. Rising energy prices and growing interest in electric vehicles are incentivizing car rental companies to add more battery-powered vehicles to their fleets, which, in turn, fosters the industry’s long-term growth prospects. The global car rental market is expected to grow at 4.6% CAGR and reach $141.17 billion by 2028. So, both CAR and HTZ should benefit in the long run.
CAR is a winner with 181.6% gains versus HTZ’s 56.6% returns in terms of their past three months’ performance. But which of these stocks is a better pick now? Let us find out.