U-Haul (UHAL) Q2 2026: Depreciation Spike Adds $107M Cost Headwind, Dealer Network Expansion Targets Utilization Upside
Surging depreciation and losses on equipment sales sharply compressed U-Haul’s bottom line despite record revenue, as management accelerates dealer expansion and self-storage breadth to offset asset overhang and margin pressure. Fleet cost normalization and self-storage rate discipline are now central to the company’s recovery trajectory, with investors watching for inflection in depreciation and network productivity by mid-2026.
Summary
- Depreciation Drag Intensifies: Elevated truck acquisition costs and weak resale values drove a steep earnings contraction.
- Dealer Network Push: Accelerated expansion aims to unlock underutilized fleet and boost moving transaction volumes.
- Self-Storage Breadth Over Depth: Strategic focus shifts to market coverage as competition and customer value sensitivity rise.
Performance Analysis
U-Haul posted record quarterly revenue, but profitability was sharply curtailed by a $107 million YoY increase in depreciation and equipment disposal losses, primarily from higher-cost vehicles acquired over the past two years and soft resale markets. Adjusted EBITDA in the core moving and storage segment rose 6% on broad-based revenue gains, yet GAAP earnings fell substantially as depreciation and asset sales losses overwhelmed operating improvements. Equipment rental revenue grew modestly on higher revenue per transaction, but total transaction volume declined, reflecting subdued consumer mobility and ongoing macro uncertainty.
Self-storage delivered a standout quarter, with revenues up nearly $22 million (about 10% of segment revenue), driven by improved average revenue per foot and targeted rate increases. However, same-store occupancy fell 350 basis points to 90.5% due to a system-wide effort to clear delinquent tenants, temporarily weighing on reported occupancy but opening capacity for future growth. UBOX, the portable storage and moving container business, continued to outpace the rest of the company in percentage growth, though the pace moderated late in the quarter. Operating expenses rose, led by personnel, liability, and repair costs, but as a percentage of revenue, expense leverage improved slightly.
- Depreciation and Disposal Losses: Fleet cost inflation and declining resale values created a $107 million YoY cost headwind, compressing earnings despite record revenue.
- Dealer Network Milestone: U-Haul surpassed 25,000 dealer locations, adding nearly 1,000 in the past year, with expansion expected to drive improved fleet utilization.
- Self-Storage Rate Management: Targeted pricing and delinquent tenant removal lifted revenue per foot, but occupancy metrics remain pressured in the near term.
Capital expenditures remain elevated as U-Haul invests in both fleet and real estate, but management signaled a pivot toward lower truck CapEx and a normalization of depreciation by late 2026. The company’s cash and liquidity position remains solid, supporting ongoing expansion and repositioning efforts.
Executive Commentary
"The earnings crush of increased depreciation and change from booking gains on equipment sales to booking losses on equipment sales became evident this quarter. We reported this over two years ago that we were having to pay too much for trucks. This pounding is likely to continue for some time as OEM manufacturers continue to bring current pricing in line. Resale values will likely decline roughly proportionally. While I'm glad to bring on new vehicles at lower costs, this likely will depress earnings in the current period."
Joe Schoen, Chairman
"During the second quarter of this year, we reported a $38 million loss on the disposal of retired rental equipment, whereas last year at this time we reported an $18 million gain. Cargo vans that we purchased over the last two years that are now being sold came into the fleet with a higher cost, and the current market resale values are not reflecting that, resulting in the loss, we have increased the pace of depreciation on the remaining units to reflect this new reality."
Jason, Chief Financial Officer
Strategic Positioning
1. Fleet Cost Reset and Depreciation Inflection
U-Haul’s core challenge remains the elevated cost basis of its rental fleet, with management candidly acknowledging that depreciation and losses on equipment sales will continue to weigh on earnings until new vehicle pricing and resale values realign. The CFO detailed a dynamic depreciation model for box trucks and a straight-line approach for vans and pickups, both now subject to accelerated charges. The company expects depreciation to peak by early 2026, with a gradual normalization as fleet size stabilizes and truck acquisition costs fall.
2. Dealer Network Expansion as Utilization Lever
Dealer locations surpassed 25,000 for the first time, reflecting a strategic push to improve market penetration and absorb excess fleet capacity. Management sees significant opportunity to rebalance truck and trailer inventories and drive incremental moving transactions, particularly in underpenetrated markets. The CEO expects visible results from this effort by mid-2026, with network growth positioned as the primary lever to offset current fleet underutilization.
3. Self-Storage: Prioritizing Market Breadth Over Depth
Self-storage remains a growth engine, but competition is intense and customer price sensitivity is high. U-Haul is prioritizing expansion into new markets—leveraging its national truck rental footprint—rather than deepening presence in already dense areas. The focus is on adding square footage and locations rather than maximizing occupancy at existing sites, a contrast to the strategy of REIT competitors. Rate management and operational quality are key to maintaining revenue per foot in a saturated market.
4. UBOX Scaling and Margin Opportunity
UBOX continues to gain market share, with management targeting category leadership. The business benefits from both moving and storage revenue streams, and margins are expected to improve as storage occupancy rises. Freight costs are well-controlled, and the business is not currently constrained by container or warehouse capacity, positioning UBOX for further margin expansion as utilization increases.
5. Capital Allocation and Portfolio Discipline
Despite elevated CapEx, management remains disciplined, signaling no intent to divest non-core self-storage assets even in less strategic geographies. The company continues to invest in both truck fleet and self-storage development, but with a cautious approach to market overbuilding and a focus on long-term returns rather than short-term profit maximization.
Key Considerations
U-Haul’s Q2 2026 results reflect both the pain of fleet cost inflation and the company’s strategic response: network expansion, storage breadth, and disciplined capital allocation.
Key Considerations:
- Depreciation Pressure Timeline: Management expects peak depreciation by early 2026, with normalization dependent on new vehicle pricing and resale market stabilization.
- Dealer Network as Utilization Catalyst: Rapid expansion aims to absorb excess fleet and drive growth in moving transactions by mid-2026.
- Storage Revenue Resilience: Rate discipline and targeted occupancy management are supporting revenue per foot, even as occupancy metrics temporarily decline.
- UBOX Margin Expansion Potential: As storage utilization improves, UBOX’s blended moving and storage margin profile could drive outsized profitability gains.
- Capital Allocation Flexibility: Strong liquidity supports ongoing investment, but management is wary of overbuilding and remains focused on long-term market positioning.
Risks
Persistently high depreciation and uncertain resale values for fleet assets remain the most material earnings headwinds, with normalization hinging on OEM pricing discipline and used vehicle market recovery. Competitive intensity in self-storage could compress margins if rate increases stall or occupancy remains pressured. Macro factors—such as consumer mobility, housing turnover, and regulatory shifts—add further volatility to both moving and storage demand. Tariff and supply chain disruptions, while currently muted, could reemerge as cost pressures.
Forward Outlook
For Q3 2026, U-Haul management signaled:
- Depreciation and equipment sale losses to remain elevated, with potential for gradual improvement by late 2026.
- Continued dealer network expansion, targeting improved moving transaction volumes and fleet utilization.
For full-year 2026, management maintained a cautious stance:
- CapEx will moderate as fleet growth slows, but storage and UBOX expansion continue.
Management emphasized the need to balance cost normalization with network and storage growth, highlighting dealer expansion, storage rate management, and UBOX scaling as the key levers for earnings recovery and margin stabilization.
- Depreciation peak expected by early 2026, followed by gradual improvement.
- Network expansion results anticipated by mid-2026.
Takeaways
U-Haul’s quarter underscores the acute impact of asset cost inflation, but also reveals a multi-pronged strategy to restore earnings power and capitalize on long-term growth opportunities.
- Depreciation Normalization Is Critical: Earnings recovery depends on fleet cost reset and improved resale market dynamics, with inflection expected by late 2026.
- Dealer and Storage Breadth Drive Next Phase: Network expansion and self-storage market coverage are positioned as primary growth and utilization levers.
- Investors Should Watch for Dealer Productivity and Storage Utilization: Evidence of improved transaction volumes and occupancy will signal the effectiveness of U-Haul’s strategic pivots in the coming quarters.
Conclusion
U-Haul’s Q2 2026 results reflect a business in transition, absorbing the costs of prior fleet inflation while laying groundwork for improved network productivity and storage-driven growth. The path to earnings normalization remains challenging, but management’s candid assessment and targeted initiatives provide a roadmap for recovery and long-term value creation.
Industry Read-Through
The acute margin compression from fleet cost inflation at U-Haul is a cautionary signal for all asset-intensive rental operators, especially those exposed to volatile equipment pricing and resale markets. The company’s aggressive network expansion and pivot toward storage breadth highlight the importance of distribution leverage and ancillary revenue streams in a competitive, cost-sensitive environment. For self-storage REITs and moving peers, U-Haul’s experience underscores the need for disciplined rate management, operational quality, and capital allocation as industry supply and customer price sensitivity intensify.