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Avis first to raise car rental rates

Date: 09 March 2009


Fleets will be hit by rising rental costs after Avis became the first daily rental giant to increase rates, with rivals expected to follow suit.

The company has warned of its second 10% rise in six months, effective from April, just after it announced annual losses after tax of nearly £9m.

Avis was first to raise rental prices as a result of the downturn with a hike of 10% back in November. The rise will apply across all branches of the business - corporate, private and insurance rentals - and all throughout Europe.

The company is also looking to slash the size of its fleet by up to 10% to increase savings over the next year. Further cost-cutting will come in the form of redundancies across Europe, with 200 employees expected to go.

No rental outlets are confirmed to close, but the whole of Avis' network is under review throughout this year.

Enterprise Rent-a-Car also said it would look at its prices.

"Few businesses can hide from the current economic issues. The challenges car makers face and the impact on the residual value market are being felt throughout the industry and will have an effect on rental," said Rob Ingram, business development boss at BusinessCar Award-winning Enterprise. "Rental rates have been held at largely unsustainable levels for some years now, so the industry as a whole may look to adjust in the coming months.

"For our part, we're constantly monitoring our pricing structures to make sure they remain competitive and appropriate in the current market whilst still offering the highest levels of customer service. It's something that we keep a keen eye on and will continue to do so."

Increasing rental prices have been widely predicted. Nissan GB boss Paul Wilcox predicted a shrinking sector during the recession.

"Fast-cycle comes under a lot of pressure," he told BusinessCar. "A number of manufacturers will not be able to play and I see the whole market reducing."

Ford boss Nigel Sharp said: "We've been cutting fast-turn business in the past few years, last year by 20,000 units to 60,000 cars."

The comments back-up Renault fleet boss Keith Hawes, who late last year predicted a sea-change as brands pull back on the generous-termed buy-back deals offered in recent years.

"We've got to the stage where the equations don't stand up so we're not doing it any more," said Hawes.