Lotte Rental posts W84.6b operating profit in Q2, up 9.6%

Lotte Rental posted consolidated sales of 765.8 billion won ($536 million) and operating profit of 84.6 billion won in the second quarter, the company disclosed Wednesday. Sales rose 2.3 percent and operating profit climbed 9.6 percent from the same period a year earlier.

The company said continued growth in its core long-term and short-term auto rental businesses, combined with a higher share of high-margin products and improved cost efficiency, drove the earnings improvement.

The used-car sales segment faced a temporary setback due to market uncertainty, but Lotte Rental said it made structural progress by converting quality vehicles into rental assets and expanding its used-car retail platform T car.

Second-quarter sales in the long-term auto rental segment reached 421.5 billion won, up 5.1 percent year on year, while operating profit grew 25.6 percent to 45.3 billion won. The number of new and used vehicles added during the quarter totaled 23,607, up 11.6 percent, and net vehicle additions rose 59.1 percent to 5,095 units.

The share of used-car long-term rentals — a higher-margin product — rose consistently from 14.1 percent in the second quarter of 2024 to 17.9 percent in the second quarter of 2025 and 20.6 percent in the second quarter of this year. Per-vehicle accident costs also fell steadily, delivering simultaneous gains in portfolio quality and cost reduction.

A rise in foreign tourist arrivals boosted the short-term auto rental segment. Second-quarter sales rose 15.6 percent year on year to 52.5 billion won, while operating profit jumped 76.2 percent to 9.9 billion won — the largest profit growth of any business unit.

Foreign customers accounted for 37 percent of daily short-term rental sales, up 7 percentage points from a year earlier. Revenue per transaction from foreign customers was about 1.8 times that of domestic customers, meaning the growing foreign customer base contributed to both top-line growth and margin improvement. The car-sharing business also saw gains in both sales and operating profit.

The Biz Rental segment is concentrating on its most competitive core products — office automation equipment, measuring instruments and forklifts — to improve portfolio profitability. Combined sales of the three flagship product categories rose 9.2 percent year on year in the second quarter. The phased wind-down of non-core businesses, including aerial work platforms and discontinued operations, is proceeding as planned, with the discontinued operations targeted for closure by the first half of 2027.

The used-car sales business recorded sales of 217.1 billion won and operating profit of 26.4 billion won, down 2.9 percent and 21.1 percent respectively from a year earlier, as geopolitical uncertainty and rising interest rates weighed on the market. Rather than selling quality vehicles at low prices during an unfavorable period, Lotte Rental said it plans to maximize vehicle lifecycle returns by converting them into rental assets — including long-term used-car rentals and monthly short-term rentals.

The T car used-car retail platform maintained strong momentum, with second-quarter sales surging 108.8 percent year on year to 30.9 billion won. Lotte Rental plans to open its fourth offline location in Busan in August, following existing sites in Seoul's Gangseo district and Bucheon and Yongin in Gyeonggi Province, and aims to accelerate T car sales expansion from the third quarter.

The company also plans to push overseas expansion in earnest in the second half. In July, it established a local subsidiary in Japan and signed a business partnership with Orix Auto, the country's second-largest car rental company, to launch short-term rental services for Korean travelers in Okinawa. Lotte Rental plans to extend the service to Sapporo, Fukuoka and other cities.

"The second quarter confirmed that profitability improvement centered on our core rental business continues, with long-term and short-term auto rentals both growing solidly," said Choi Jin-hwan, president and CEO of Lotte Rental. "With new growth engines — including T car's rapid expansion and our overseas push starting in Okinawa — gaining traction, we will further consolidate our leading position in the domestic mobility market on the strength of our differentiated vehicle management capabilities and customer service competitiveness."