Gas prices hurt rental car industry overall

Rental car companies are finding that demand is up and outpacing supply for rental vehicles that offer customers better gas mileage. The rental companies are feeling the pinch financially, according to the Los Angeles Times.

The travel company Sabre, owner of Travelocity, reported that bookings for compact and economy rentals rose by 10.2 percent in April, and were up another 14.3 percent for May, in comparison with the same months last year. Rentals of mid- and full-sized and luxury cars and minivans were down, according to the newspaper’s report.

The combination of greater consumer demand for smaller, more fuel-efficient cars and what appears to be a negative shift the previously-close relationship between carmakers in the U.S. and rental car agencies has created a tight supply of these rental vehicles.

Due to the soft economy and high fuel prices, rental car companies are struggling financially, and the stock prices of the major players, including the Avis Budget Group, the Dollar Thrifty Automotive Group, and Hertz Global Holdings have plunged this last year, even with rental volumes and revenue up.

Mike Kane, owner of the Vehicle Replacement Consulting Group, commented that sport utility vehicles (SUVs) were more popular than smaller rental cars just six months ago, but that this is no longer the case.

“That’s a big deal,” he added. “That’s 25 years of history changing.”

www.sabre.com