Car rental group Zeda, which operates the Avis and Budget businesses, reported lower revenue for the half year to March as the challenging trading environment forced corporate customers to delay investment decisions, including fleet replacement and holding onto vehicles for longer.

Small to medium enterprises (SMEs) also came under similar strain, particularly in the mining and transport sectors.

Revenue was down 1.6% to R5.2bn. The leasing business segment delivered a solid performance, with revenue increasing by 5.6% to R1.4bn, underpinned by increased penetration within the corporate, heavy commercial fleet and the rest of Africa businesses.

The leasing business maintained its growth trajectory, despite the overall delayed fleet investments, Zeda said.

It said the upward trajectory of additional revenue was affected by corporate customers delaying replacement cycles and some constraints from SMEs with contracts in the mining and transport sectors in South Africa.

Heavy commercial remains a steady growth pillar for Zeda, with a healthy order book. The car rental segment’s revenue decreased by 4% to R3.8bn due to a drop in used car volumes.

However, excluding the car sales business, rental revenue remained flat.

“We were able to defend the revenue levels despite a decline in the replacement and inbound business. Rental days increased by 2.5%, primarily driven by a 49% rise in the short-term subscription business, following an improvement in technology that made transactions easier for customers,” said Zeda.

Zeda has on average  more than 20,000 vehicles in its fleet in Southern Africa. Its customer segment base is diversified and consists of the private sector, public sector, insurance business (replacement), inbound market, domestic leisure market and short-term subscription.

This business provides a range of self-drive and driven products and services, including car and van rental, chauffeur services and luxury vehicle services.

“In a period where traditional car rental and vehicle sales faced mounting pressure, our leasing, subscription and greater Africa strategies delivered, helping grow earnings, improve margins and continue investing for the long term.

“We achieved this through a stringent implementation of the operating model of financing right, buying right, using right and disposing right,” said Zeda CEO Ramasela Ganda.

Zeda anticipates improved performance in the second half of its 2025 financial year, driven by stronger car sales, contract renewals and subscription momentum.

Ganda said the bedrock of Zeda’s growth pillars consists of the subscription business, the corporate leasing book, greater Africa, and the used car business. “These pillars provide us with access to vehicles, markets and a disposal channel, which are core to our fundamentals, which remain strong despite the challenging trading environment.”