Economy car rental
With the credit crisis hitting hard the U.S. and the inflation keeping a steady up trend, lots of car rental companies announced that they would increase prices explaining their move with the choking price of the gasoline.
Last week Avis Budget Group reduced its profit outlook for the year and said it will cut 700 jobs. Business Week reported that the Persippany based car rental company expects to report a third quarter loss of about $1 billion. The company also lowered its earnings and sales estimates for the full year as more people reduce their travel expenses and rent fewer cars.
Another troubled car rental company – Dollar Thrifty Automotive Group – also announced it would cut off 400 jobs comprising 6 percent of its work force. The Tulsa-based company President and CEO Scott Thompson explained that the layoffs will realign the workforce with business conditions, again pointing at the slowing economy and unfavorable credit markets.
Among competitors laying off workers, Hertz Global Holdings Inc. boosted retail car rental rates by more than 10 percent, on average, at North American airports due to inflation. The rate increase also affected North American off-airport markets by 5 percent, while European airport and downtown rates increased approximately by 10 percent. However, the negotiated contract rates still remain unchanged. In contrast, both short-term and long-term equipment rental levels boosted for the U.S. and Europe.
Last week the American Express business travel report was released predicting that the overall trip costs will increase globally 2,8 percent year over year for domestic trips and 4,3 percent for international trips. Amex explained that average car rental prices were also expected to increase slightly as rental firms compete energetically for corporate accounts.
Having this in mind, it is not surprising that earlier TLS Vehicle Rental claimed that the move towards a pay-as-you-go culture that predates the credit crunch is encouraging operators to rent vans for longer periods, thus boosting the long-term car rental. This move is explained by the economic slump appearing to cause more car rental companies to prefer contract hire than buy new vehicles to renew their fleet. According to the GE-owned company more customers are viewing rental as a longer-term means of acquiring the car they need. The CEO Carl D’Ammassa stated that over the years the rental as a vehicle acquisition product has been growing and that the credit crunch is accelerating this visible trend. The long-term vehicle rental as a trend has also spread to truck fleet operators, not only to the car fleet sector making it a real massive move.
In view of the deepening economic crisis there are several tips consumers can follow to reduce their travel expenses and still be able to enjoy their pre-planned far-off holidays despite the fluctuating prices of gasoline.Tags: car rental, car rental europe, crisis, Economy car rental, prices