Fleet News

Rental shake-up means massive rate rises

BRITAIN'S rental industry is going through its biggest shake-up for more than a decade as fleets face rate rises of up to 25% as companies fed up with losing money decide enough is enough. Meanwhile there is speculation that the industry could undergo further consolidation with at least two of the major players being snapped up.

The highest rate rises are on one and two-day rentals on which, in most cases, hire firms have lost money for years. However, rates for longer car hire periods are also increasing and charges for delivery and collection are being made. The mood of the industry was summed up by John Leigh, National Car Rental senior vice-president and general manager Pan-Europe, who said: 'It is not rental companies being greedy but we have got to get our income aligned to our costs. Fleet operators have got to keep their costs under control but I think they will understand. The rate increases will impact on one and two-day rentals more than longer rental periods.'

The move to increase rental rates across the market was led by Europcar which announced it was raising rates by 5%-8% - more than £3 a day on a typical rental - to bring the company into profit. Sixt Kenning reacted with a £5 surcharge on one-day rentals. Europcar general manager Paul Fleming's bid to 'get paid for what we provide' - losses last year were around £15 million - came as rival rental company Budget moves back to franchising from owning sites after announcing worldwide losses last year of £104 million.

Nigel White, Avis UK's head of corporate sales, told Fleet NewsNet: 'Every rental company is increasing rates. Our rates are increasing by between 15%-20%, including the introduction of a collection and delivery charge. We are increasing our rates and at the same time inviting customers to go to the marketplace but they are finding that all rental firms are increasing charges.'

The rate rises not only come as rental companies unilaterally declare that they can no longer subsidise rentals - particularly one or two-day rentals - but also as manufacturers cut back on 'dumping' cars into the sector. Leigh said: 'The industry is not making satisfactory returns and in some cases they are negative. All the rental companies have done as much housekeeping as they can do. Customers do not want to lose out on service, particularly vehicle deliveries to work or home addresses, so the way forward is to charge for vehicle deliveries.'

Thrifty Car Rental sales and marketing director Andrew Burton said: 'The directors of big companies in the UK and the people they report to overseas are all saying they must get some money back. I hope the market leaders will hold out and push their rates up because we will joyfully follow.'

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