Avis Budget Group Inc.’s stock closed at a record high yesterday as an economic reopening that’s boosting travel demand collides with industrywide inventory tightness, Bloomberg News reported. Shares of Parsippany, N.J.-based Avis rose 1.9% to $77.24, more than doubling so far this year and soaring from a pandemic low of $7.78 in March 2020. The industry is raising prices as post-vaccination business and leisure travel surges and household-name rental companies don’t have enough cars for customers to drive off the lot. The firms are adding cars back to their fleets, but cautiously. During the early months of the pandemic, Avis and rivals Hertz Global Holdings Inc. and Enterprise Holdings Inc. sold large portions of their inventory and cut costs severely to shore up finances as U.S. travel ground to a halt. Now, their ability to restock cars is also being hampered by automakers pausing production due to a global semiconductor shortage. Automakers’ sales to fleet customers fell about 30% in the first quarter, according to analyst estimates. Carmakers are seeing nascent signs of increased fleet demand but are prioritizing sales to higher-margin retail buyers. “Fleet is definitely coming back,” Judith Wheeler, Nissan Motor Co.’s vice president for U.S. sales, said in an interview April 1. “We will try to do our part to give them some inventory, but we’re going to focus on retail.” Even so, Avis shares continue to soar as main rival Hertz faces restructuring from bankruptcy and analysts see tailwinds from the pandemic lasting into the second half of this year.
