'There is certainly inflation in key industry costs, such as vehicle costs, interest rates and wages. As a result, we have been selectively increasing prices on a market-by-market basis, depending on the competitive environment,' said Hertz Europe president Charles Shafer.
Budget Rent A Car said it was likely to follow Hertz's lead in certain markets. A Budget spokesman said it was also facing increased costs that would be passed onto the customer in certain markets. If the market leading competitor increases its rates, Budget was likely to follow, he said.
In the US, Hertz is raising its non-contract daily and weekend car rental rates by $3 per day. Its weekly rentals could go up by as much as $20 per week. Earlier this year Fleet News Europe revealed that several negative factors in France, including the introduction of a 35-hour-week, had placed severe pressure on daily rental margins in the country.
Alain Tuil, Hertz franchise director for France and French Africa, said profit margins had been further squeezed by manufacturers increasing the cost of buy-back supply arrangements, and by changing arrangements for the registration of vehicles.
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