Car rental rates to rise sharply on visitor decline

The cost of renting a car in Europe is about to soar, according to rental car leader Avis Europe.

Citing a lack of visitors contributing to car rental volumes, Avis said that it will have to increase rental rates to offset its declining profits.

The rental car company reported that the number of days its vehicles were out on rental during the summer dropped because there were fewer Americans visiting Europe.

Although Avis has been able to maintain its business through increased corporate rentals and its insurance-replacement business, those areas have now also fallen off due to the worsening economic climate.

A spokesman for the company said: “Volumes have noticeably weakened in the fourth quarter to date.”

Pascal Bazin, who was brought in to run Avis Europe a year ago, said that he had put a “significant price increase” in place and was looking to increase rates further in 2009.

The executive has warned that Avis will not meet last year’s underlying profits of €33 million, and that also much of this year’s profits will be wiped out by a €23 million charge due to cutting 315 jobs. The jobs that were cut constituted approximately five per cent of the company’s workforce.

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