Car Hire Rates To Rise & The End of the Free Upgrade?

Car rental rates could rise as residual values on second-hand cars fall, according to several leading car rental companies.

Car hire companies’ business models involve buying or leasing large numbers of new cars at heavy discounts¬† from manufacturers. They then sell these – typically 6-12 months later – and replace them with a new intake of brand new cars. According to John Leigh, managing director of Europcar UK Group, “Weakening residual values are both a serious concern for us and the manufacturers.”

Falling second-hand prices means that the gap between purchase price and resale price gets bigger. The only way to compensate for this is for rental companies to increase their daily rates – something which seems likely.

Free Upgrades No Longer Desirable

Rising fuel prices and tightening purse strings look set to mark the end of another honourable rental tradition – the free upgrade. Corporate rental customers increasingly have stringent environmental policies that specify maximum carbon emissions for rental vehicles – and private customers are increasingly concerned about minmising fuel costs.

The result of both these trends is that “people are getting very vocal about not wanting a larger car”, according to Chris Payne, a spokesman from Dollar Thrifty who was speaking to The Guardian.

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