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Avis predicts rental rates will rise to 'more realistic levels'

Date: 22 March 2011   |   Author: Hugh Hunston

Corporate customers face daily rental rates climbing by up to 10% over the next 12 months as rental companies seek "more realistic charges", according to Anthony Ainsworth, Avis UK's commercial director.

Forecasting a "continuation of steady and sustained increases averaging between five and 10%" over the past two years in daily rates, Ainsworth said: "We can expect rates to rise on daily rentals this year and into next."

He added: "We found that the market as a whole has moved rates up as a consequence of rising input costs and a greater focus on the segments they serve. There is an element of starting to charge more realistic daily rates so we can maintain investment in the levels of service customers expect."

ING Car Lease's head of rental services, Michelle Wilson, said rising holding costs had contributed to a general 2% increase while overheads on automatic models and estate cars had resulted in those categories' rates climbing by between 5% and 8%, with vans incurring a 5% hike.

She said the general upward trend had been less severe in ING's case because "we negotiate really hard with our suppliers, the rental firms, so our rates have gone up by a minimal percentage and in some cases gone down. Fleet availability issues have meant difficulty in getting supplies of mainly D-sector cars like the Mondeo and Insignia."

Wilson also warned that rental rates for electric cars could involve a premium of up to 70% over petrol or diesel equivalents, "which could effectively price them out of the market".

She said: "At present, electric cars are seen within the sector as a token or symbolic gesture until the infrastructure exists. It is about testing the technology plus the market, and realistically they will have no immediate impact if any at all. You must factor in running costs, maintenance, specialist equipment and personnel, plus issues like breakdowns and charging point access."

However, Hertz's general manager for strategic products in the UK and Europe, Neil Cunningham, said: "Electric vehicles could account for 10% of the general rental fleet within five years. He added: "Rental rates depend on equivalent fuelling costs, and per mile, electric should be a lot less than conventional fuels. They will initially be limited to pool fleets and ad hoc short journey use."

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