American Express Global Business Travel (GBT) is predicting that strong demand and supply-side issues will push up car rental rates in Europe and other regions of the world during the next year.
The travel management company projects year-on-year car rental rate hikes of 7 per cent in Germany, 6.5 per cent in the UK and 5 per cent in France for the 12-month period ending in March 2024. Smaller rises are expected in the Nordics (+1 per cent) and the Benelux countries (+3 per cent).
Amex GBT made the predictions in its Ground Monitor 2023-24 report which also forecasts a 5 per cent rise in car rental rates in the US and Canada, while prices in Argentina and Brazil are likely to go up by 6 per cent and 5.5 per cent respectively. Corporate travellers in Australia also face increases of around 2 per cent.
The TMC suggested there would be regional pricing variations within countries and prices could moderate during the second half of the period.
“2023 looks like it will be a tale of two parts, pricewise. For most of this year, rental prices appear likely to continue to follow the rising trajectory set in 2022,” according to Amex GBT.
“As automotive production returns and rental fleets recover, price rises should stabilise from late 2023 into 2024.”
Even though supply chains for the car rental sector are set to improve during the next 12 months, continuing growth from the leisure travel market will keep prices high with no return to 2019 rates.
“It is unlikely that prices will return to 2019 levels,” according to Amex GBT. “Cars are evolving to become smarter; as they do so, they're more expensive to buy, maintain, and insure.”
Amex GBT said it used a forecasting model with pricing data “extracted from Amex GBT's data lake,” along with other information, including inflation, gross domestic product, unemployment and oil prices.
The TMC also noted that although 70 per cent of all new cars sold globally in 2022 were electric vehicles (EVs), corporate travellers “appear reluctant” to rent them.
“EVs are attractive to corporates intent on reducing business travel carbon emissions,” said the report. “However, corporate drivers appear less enthusiastic; there are reports from Europe of supply now exceeding demand and of EVs sitting unused at rental locations
“Cost may be an issue; EVs rent at a premium to conventional cars. Then, there can be hidden costs associated with EVs such as extra fees for charging. Range anxiety remains a concern but the biggest factor may be a lack of driver familiarity with EVs.”