Car-lease price bumps expected
By Tom Stundza -- Purchasing, 9/13/2006 5:15:00 PM
Car rental rates have increased about 25% over the past 24 months and further increases are possible this winter because of changes in the way they get their vehicles, according to the car rental industry consultants Abrams Consulting Group in Purchase, N.Y.. Many large corporate travel managers are beginning to negotiate new rental car contracts this fall—just as the rental car industry faces a major business shift. Struggling U.S. automakers are no longer interested in supplying cars under the advantageous terms that rental agencies have come to expect. So, Neil Abrams, president of Abrams Consulting, says car rental agencies will have to adjust by trying to enter fleet purchasing agreements with foreign automakers, raising prices to consumers, or by altering the way they manage their fleets. Reports on the Dow Jones Newswires indicate that under the old fleet sales system, car manufacturers agreed to sell autos that were eligible for repurchase or guaranteed depreciation programs--so-called program cars--to rental agencies. Those program cars made it easier for rental agencies to calculate their depreciation expenses in advance, and to reduce the size of their fleets by returning cars to automakers sooner than originally expected. That system is changing as the auto makers try to focus on higher-profit sales to consumers, reducing their participation in program car deals and increasing rental agencies' largest cost, their fleets.
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