What were the changes in operating lease right-of-use assets for Dollar Rent A Car in 2024?
Dollar_Rent_A_Car Franchise · 2025 FDDAnswer from 2025 FDD Document
| As of December 31, | ||||
|---|---|---|---|---|
| (In millions) | 2024 | 2023 | ||
| Revenue earning vehicles, net | ||||
| U.S.(1) | $ | 9,880 | $ | 11,980 |
| International | 2,083 | 2,671 | ||
| Total Hertz Global and Hertz(1)(2) | $ | 11,963 | $ | 14,651 |
| Property and equipment, net | ||||
| U.S. | $ | 535 | $ | 577 |
| International | 88 | 94 | ||
| Total Hertz Global and Hertz | $ | 623 | $ | 671 |
| Operating lease right-of-use assets | ||||
| U.S. | $ | 1,815 | $ | 1,995 |
| International | 273 | 258 | ||
| Total Hertz Global and Hertz | $ | 2,088 | $ | 2,253 |
During the third quarter of 2024, at the conclusion of the Company's historical peak rental season, there was a reduction in the cash flow projections in the Americas RAC and International RAC segments, indicating that the carrying values of their long-lived assets may not be recoverable. The reduction was largely attributed to the acceleration of the rental fleet rotation in the segments, where shortening the useful life reduced the potential future cash flows expected to be earned from the fleet. Operating cash flow projections also deteriorated from delayed timing of operating cost improvements and longer timeframes associated with revenue maximization initiatives. As a result, the Company tested the recoverability of its long-lived assets, consisting of revenue earning vehicles, ROU assets and property and equipment (collectively, the "Long-Lived Assets") in its Americas RAC and International RAC segments by comparing the carrying values against undiscounted future cash flow projections and determined that an impairment existed.
Effective August 31, 2024, the Long-Lived Assets were written down to their estimated fair values. The fair value for revenue earning vehicles was determined using a market approach utilizing prices for similar assets in active markets. Fair value for ROU assets was determined using a discounted cash flow income approach considering estimated market rent. The fair value for property and equipment was determined using a market approach, where available, and where not available, a cost approach utilizing estimated replacement cost. This resulted in recognizing impairment charges of $923 million and $125 million against the Company's revenue earning vehicles and ROU assets, respectively. No impairment was recognized for property and equipment assets.
Source: Item 23 — RECEIPTS (FDD pages 102–301)
What This Means (2025 FDD)
According to Dollar Rent A Car's 2025 Franchise Disclosure Document, the company's operating lease right-of-use assets experienced changes in 2024. The total operating lease right-of-use assets for Hertz Global and Hertz decreased from $2,253 million in 2023 to $2,088 million in 2024. This represents a decrease of $165 million year-over-year.
Within the U.S., the operating lease right-of-use assets decreased from $1,995 million in 2023 to $1,815 million in 2024, a decrease of $180 million. Internationally, these assets increased from $258 million in 2023 to $273 million in 2024, reflecting an increase of $15 million.
Additionally, Dollar Rent A Car recognized an impairment charge of $125 million against its ROU assets during the third quarter of 2024. This impairment was part of a larger write-down of long-lived assets due to reduced cash flow projections, largely attributed to the acceleration of the rental fleet rotation. The fair value for ROU assets was determined using a discounted cash flow income approach considering estimated market rent.