Avis announces hike in car rental rates

On Monday, the Avis Budget Group announced that it would be raising some of its rates on rental cars as it continues to struggle with the rising cost of operating its rental business.

Shares in the rental car giant rose in Monday morning’s trading, up 14 cents to 52 cents, an increase of 37 percent.

Beginning on December 1, the operator will raise retail car rental rates in the U.S. at airport rental locations and some off-airport locations by $3 per day, or $20 per week. Increases will not apply to corporate accounts with agreements in place or to other special arrangements that exist.

“The severe impact of escalating costs affecting our business clearly requires that rates rise over time in order to improve profitability,” said the company’s executive vice president for strategy, Scott Deaver.

Since the value of their fleets has steadily declined in the economic downturn, and consumers have decreased the amount of driving they do, rental car companies have seen their financial performance impacted. So far this year, shares in Avis Budget have fallen by 97 percent.

Standard & Poor’s removed Avis from its mid-cap stock index last week. Earlier in November, the rental car company reported a loss for the third quarter of $1 billion.

Thanks to www.businessweek.com for the above quotes, for more information please visit their website.

www.avis.com