Why are Car Rental Costs Rising?

Renting a Car When Travelling Abroad Has Become More Expensive

Jul 1, 2009
Asa Ghaffar

Car Rental - U.S. Government

Considering renting a car when travelling abroad this year? Find out how an imbalance between supply and demand has caused car rental costs to rise steeply.

The economic downturn may have brought down the cost of a cruise, airfare or hotel but this has not been the case for car rental costs. This increase in holiday costs is offsetting some of the other savings realised when traveling abroad. This has left holiday makers wondering how and why airport rental costs have risen so dramatically.

Car Rental Costs Rise Steeply

In a May 2009 report, Abrams Consulting Group stated that airport rental costs had risen from $199.65 to $345.99 in the last 12 months. This represents an increase of a staggering 73%. Airport rental costs for a compact car went up from $210.38 to $347.44 in mid-June, representing a 65% increase.Of course, this increase in holiday costs is only an issue for those who are renting a car.

Why Have Airport Rental Costs Risen So Dramatically?

The Abrams Consulting Group said that the reason for rising car rental costs is the lower number of vehicles available. Although the demand for rentals is down 15%, agencies have cut back their fleets by far more. Companies are selling their fleets of vehicles and not buying replacements. Not only have airport rental costs risen, the cars are older. Mr Abrams said that: "The average age of a rental car is now about 11 months, compared with about nine-and-a-half months a year ago."

How Can Car Rental Costs Be Reduced?

Off-airport locations. Airport rental costs are lower the further a consumer shops from an airport.
Online comparison service. Use sites, like expedia.com, to reduce holiday costs when traveling abroad. Trawl the market and make a few adjustments in order to save money.
Upgrade to a better vehicle. Some of the best deals are available on upgrades. Whilst this may not save money, renting a car of a higher caliber for a very good price is possible.
Take a risk. It is possible to reduce airport rental costs considerably by using Priceline.com. The consumer enters the price they are looking for and this is either matched or rejected.
Online search. Perform a search on Google to see if any discount codes are available.

Airport rental costs have risen dramatically over the course of the last 12 months, but it is still possible to reduce holiday costs when travelling abroad. Use a few of the strategies alluded to above to reduce car rental costs. Whilst it may be cheaper to get last minute holidays, renting a car should be done weeks in advance.

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Sources

Higgins, Michelle. (28 June, 2009). "The soaring cost of car rentals." The New York Times.

Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional.