Car rental rates look set to fall despite increasing costs for rental companies, according to a new report.
In its Ground Monitor 2019 released this week, American Express Global Business Travel says the traditional car rental model is "under pressure across much of the world".
"Costs are rising but the car rental companies are restricted in their ability to respond by raising rates: overcapacity — and competition between the rental companies — means there is little scope to push up average daily rates (ADRs)," the report says.
Our chart this week shows how rates are expected to change in key European markets during 2019; the pressure is largely downwards.
In the UK, costs are predicted to rise for car rental companies as Vehicle Excise Duty is increasing. The report says, "The ride-hail sector received a boost in 2018 when the courts overturned the Mayor of London's suspension on Uber. Other UK cities were waiting on the outcome of the trial before deciding how they would treat ride-hail services in their jurisdictions."
The company says strong competition between car rental companies in Germany is driving down rates but they are taking action by introducing premium models such as SUVs and automatics to drive up revenue. Buyers should also expect to start paying increased surcharges for pick-ups at airports and railway stations.
The report says, "Car rental companies in [the Benelux] region face the same upwards cost pressures as elsewhere. However, the economic background — and competition from other modes of transport, including rail and ride-hail — means rental rates are predicted to fall by 4.5% in Belgium and by 2.5% in the Netherlands."
Traveller pressure is likely to continue to see ride-hailing services to continue growing in importance in the corporate space.
The company says, "Travellers are increasingly making app-based ground transport, such as ride-hail, car clubs and ride share, part of their travel toolkit. Corporations have kept pace with traveller behaviour by including ride-hail services, such as Lyft, Uber and Didi Chuxing, in policy. In GBT's experience, many corporations allow travellers to use approved ride-hail services, but do not mandate their use."