Avis Budget Group, Inc. (CAR) Securities Class Action Lawsuit Update [May 30, 2025]

Introduction  

A securities class action lawsuit has been filed against Avis Budget Group, Inc. (“Avis” or the “Company”) for alleged violations of the federal securities laws.  

It was filed in the United States District Court for the District of New Jersey on April 25, 2025.  

The lawsuit seeks to recover damages for investors who purchased or otherwise acquired Avis securities between February 16, 2024 and February 10, 2025, inclusive (the “Class Period”).  Investors who purchased Avis Budget securities during the Class Period might be eligible to join the class action lawsuit.  

The Avis Budget Group lawsuit alleges and certain of its senior executives violated federal securities laws, including the Securities Exchange Act, by making material misstatements about the company’s internal controls and its financial reporting related to its fleet rotation strategy, which were supposed to significantly accelerate fleet rotations. In February 2025, Avis revealed substantial impairment charges and a net loss associated with its fleet rotation. Following this revelation, Avis’s stock price dropped over 11%, causing significant negative impact on investors who incurred substantial losses.

Case Details  

Merriam v. Avis Budget Group, Inc., et al.,  

Case No.: 2:25-cv-03332 

U.S. District Court, District of New Jersey 

Filed on April 25, 2025 

Company Profile  

Avis Budget Group, Inc. provides car and truck rentals globally under brands such as Avis, Budget, and Zipcar. The company operates in multiple regions, including the Americas segment, where fleet management plays a crucial role in profitability.

Class Period: 

February 16, 2024 and February 10, 2025, inclusive.   

Investors who acquired Avis Budget securities during the Class Period might be eligible to join the Avis Budget Group class action lawsuit.  

 Allegations  

The filed complaint alleges that Avis Budget Group, Inc. (“Avis Budget Group”) crafted and implemented a fleet rotation strategy that ultimately caused the Company to recognize billions in impairment charges. This plan, executed primarily during the fourth quarter of 2024, sought to significantly accelerate fleet rotations in the Company’s Americas segment. According to the complaint, this foregoing acceleration shortened the useful life of the Company’s vehicles, reduced their recoverable value, and triggered substantial accounting write-downs that materially impacted the Company’s financial results.

In its2023 Form 10-K, filed on February 16, 2024, Avis Budget crafted a corporate strategy emphasizing profitability and stakeholder value through fleet rotation optimization. However, the filing did not reveal the company’s plan to significantly accelerate fleet rotations later in the year, nor did it warn of potential financial consequences. Instead, it presented generic risk disclosures that failed to account for the true scope of what would unfold. 

By Q1 2024, Avis Budget’s Form 10-Q, filed on May 2, 2024, contained further statements reinforcing fleet management efficiency but again omitted key details about the acceleration of fleet rotations. While the filing acknowledged general fleet cost risks, it did not disclose that this strategy would shorten the useful life of the company’s vehicles in the Americas segment and ultimately lead to impairment charges.

As the year progressed, Avis Budget’s Q3 2024 earnings press release, issued on October 31, 2024, highlighted fleet operations as a cost-saving measure, specifically citing the integration of 2025-model vehicles as a way to lower long-term expenses. However, the complaint alleges that this statement was materially false, as it failed to acknowledge the substantial financial impact of these accelerated rotations. 

On November 1, 2024, during its Q3 2024 earnings call, CEO Joseph Ferraro and CFO Izilda Martins reiterated the company’s strategic fleet positioning, assuring investors that fleet rotation changes would reduce holding costs and strengthen financial performance. According to the complaint, these statements misrepresented the actual risks, as executives were already aware that the fleet strategy would lead Avis Budget to incur substantial losses through impairment charges totaling $2.3 billion and $180 million in additional non-cash related charges.

The complaint further alleges that Avis Budget crafted and implemented this plan while publicly assuring investors that its fleet rotation practices were sound. These materially false statements, which allegedly violated the Securities Exchange Act, artificially inflated Avis Budget’s stock price. When the truth emerged, investors incurred substantial losses.

The Truth Emerges 

As a result of the foregoing acceleration, Avis Budget recorded impairment charges totaling approximately $2.3 billion, alongside $180 million in additional non-cash related charges, contributing to a significant negative impact on financial performance. These disclosures appeared in Avis Budget’s February 11, 2025 press release announcing its fourth quarter financial results, in which the Company acknowledged that the accelerated rotation strategy had adversely affected profitability. At the same time, Avis Budget attributed the losses to this fleet decision and announced that the Company’s Chief Transformation Officer would replace CEO Ferraro.

Market Reaction 

Following the Company’s February 11, 2025 announcement, Avis Budget's stock price fell 6.82%, closing at $83.59 per share. 

 Next Steps  

• Submissions for lead plaintiff are due June 24, 2025.   

• The Court will issue its order for lead plaintiff and counsel in the weeks after submissions are due.    

• The Court will then consider motion for class certification.     

• The Court will later consider a Motion to Dismiss.    

To learn if you are eligible for recovery under the Avis Budget securities class action securities lawsuit, visit the case submission page here. 

Disclaimer: This shareholder alert is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for personalized guidance. No specific outcomes are guaranteed.