Rental returns

Price trends

American Express Global Business Travel’s most recent Ground Monitor report found that car rental rates have reached “a new equilibrium after three volatile years”, which saw significant price hikes and often difficulties for corporates in sourcing the right vehicles as supply chain issues delayed the delivery of new cars.

While these problems are largely now resolved, fellow travel management company CWT is forecasting that global average daily rates (ADRs) will come in at $45.40 in 2024, which would be a 2.5 per cent rise on 2023, with another rise of 2.4 per cent to $46.50 predicted for 2025.

Rental prices in the EMEA region are expected to see even lower increases of 1.1 per cent to an average of $57.60 in 2024, followed by a rise of just 0.9 per cent to $58.10 in 2025.

“The cost of buying and operating cars is easing, and fleet concerns have stabilised, so suppliers are keeping rates in check to stimulate demand,” adds CWT in its 2025 Global Business Travel Forecast.

Mandy Dunbier, ground transport partnership manager for Flight Centre Travel Group, parent company of FCM and Corporate Traveller, also predicts a “stabilisation of prices” in the coming year.

“Increased market competition, coupled with a return to more normalised fleet sizes, will likely contribute to moderating price fluctuations over the next year,” she adds.

But there are considerable variations in car rental rates across Europe, emphasises Sesilia Kalss, senior manager, consulting, at Amex GBT. She adds that UK prices tend to be higher than its neighbours due to vehicle shortages and a lack of available mechanics pushing up costs.

Kalss adds that overall rental costs in Germany will “likely remain high” in 2025, although prices for some type of vehicles “could soften or even reduce, depending on the brand mix in the supplier’s fleet”.

France is expected to see smaller price increases but Kalss warns that strong leisure demand will push up rates “in holiday seasons and popular destinations.”

Prices could also be affected by major car rental companies deciding to keep a tight rein on fleet sizes as a way of maintaining prices and yields.

This message was amplified by Avis Budget Group’s CEO Joe Ferraro who said in a recent earnings call that the “primary goal was to adjust our fleet size throughout the year”. He added that “we are on track to start 2025 with substantially fewer cars than we started with in 2024″.

“We will continue to improve as we implement further operational enhancements and remain laser-focused on our fleet discipline,” said Ferraro, as Avis Budget looks to target “higher-margin business”.

It’s a similar story for other major players, with Sixt’s co-CEO Alexander Sixt stressing that it would be maintaining “conservative fleet planning at a tight level” during 2025.

Meanwhile, Hertz has made fleet reduction a key component of its current strategy. “We believe we can produce the same number of transaction days with less fleet, which will also benefit our cost structure,” said CEO Gil West.