CAR Lawsuit Alert! Class Action Lawsuit Against Avis Budget Group, Inc.

A class action lawsuit was filed against Avis Budget Group (CAR) by Levi & Korsinsky on April 24, 2025. The plaintiffs (shareholders) alleged that they bought CAR stock at artificially inflated prices between February 16, 2024 and February 10, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Avis Budget stock during that period can click here to learn about joining the lawsuit.

Avis Budget offers mobility solutions through its Avis and Budget brands and operates a car-sharing network through the Zipcar brand. The company operates its business both directly and through licensees across North America, Europe, and Australasia.

The company’s claims about the fleet rotation program undertaken in the fourth quarter of fiscal 2024 are at the heart of the current complaint.

Avis Budget’s Misleading Claims

According to the lawsuit, Avis Budget and two of its senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about its fleet rotation plans, and ancillary issues, from SEC filings and related material.

In an annual report filed during the Class Period, the company noted that the fleet rotation plan was aimed at improving customer experience, maximizing profitability, and delivering stakeholder value. Additionally, it mentioned that the company aimed to improve operational efficiency and strategically reduce costs over the long term.

Furthermore, in a quarterly report filed on May 2, 2024, Avis Budget listed the risk factors that could impact its future performance. These included changes in fleet costs due to fluctuations in the price of new vehicles, driven by headwinds such as inflation, manufacturer recalls, supply chain issues, labor shortages, or a shortage of semiconductors used in the vehicle production.

Also, the company’s operational performance could be impacted by changes in the prices at which it disposes of used cars “either in the used vehicle market or under repurchase or guaranteed depreciation programs.”

Finally, the CEO mentioned during an earnings call that the company witnessed solid vehicle utilization rates, supported by ongoing fleet discipline. Plus, Avis Budget’s model year 2025 purchase was mostly complete, which could lead to significantly lower holding costs once the new vehicles rotate into the fleet. He added that the company was focused on prioritizing high-margin business, while balancing volume. 

However, subsequent events (discussed below) revealed that Avis Budget had failed to inform investors that the fleet rotation plan, in fact, shortened the useful life of the majority of its vehicles in the Americas segment, thereby reducing their recoverable value.

Plaintiffs’ Arguments

The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about the effectiveness of the company’s fleet rotation strategy and its impact on financial performance.

The information became clear on February 11, 2025, when Avis Budget released disappointing results for the fourth-quarter of fiscal 2024. The company reported a net loss of $1.96 billion, or $55.66 per share, in Q4, compared to a profit of $259 million, or $7.10 per share, reported in the same period of the prior year.

Avis Budget attributed the loss to “a change in strategy to significantly accelerate fleet rotations.” Unfortunately, this change shortened the useful life of the majority of its vehicles in the Americas segment. As a result, the company had to record a one-time non-cash impairment charge of $2.3 billion and other non-cash related charges of $180 million in Q4. Following the news, CAR stock fell 6.8% on February 12.

To conclude, the defendants’ fleet rotation strategy backfired, leading to large losses in Q4FY24. Despite these issues, CAR stock has gained 48.2% so far this year.