Business Car Rental Rates Declining

Some good news for road warriors who spend a lot of time on the nation's highways. Recent data shows that corporate rental car rates are going down, even while airfares and hotel room rates begin to edge back up as the country slowly emerges from a recession.

Car Rental Company
Car Rental Company

TravelGPA, a firm that analyzes business travel data, reported the average daily cost of a corporate car rental fell almost 5 percent in the first quarter of 2012, compared to the first quarter of 2011. Their figures were based on analysis of nearly a million corporate car rental transactions.

Travel Leaders, a chain of over 1,250 travel agencies nationwide, looked at 1.5 million of its own business travel bookings from the same period and found that per-day car rental prices dropped 4.6 percent, and the average cost per rental fell 2.8 percent.

Quarterly reports from a major industry players reflect the same trend. According to an article in Business Travel News, Hertz saw a 3.6 percent drop in corporate rates (for on-airport rentals) and Avis-Budget saw a 2 percent decline.

According to the article, Avis CEO Ron Nelson attributed the downward pressure on prices in large part to stiff competition for corporate customers between the three major companies — Avis, Hertz and National. Businesses are savvy and opt for rental agencies offering the best rates. Rental companies, in turn, can negotiate and offer lower prices or face losing customers.

This is not the first time corporate rates have fallen. David Holyoke, president of Travel Leaders Corporate, says that he has seen a steady decrease in corporate car rental rates over the last several years, even as the industry has seen mergers and consolidation. And Ron Nelson predicted that Avis's year-over-year rate decline for 2011-2012 would settle at 2 percent, which he said was similar to the year-over-year drop from 2010 to 2011.

Despite the downward pricing trend in the corporate segment of the market, none of the major car rental firms are faring badly. Avis and Hertz both reported a rise in total rental volume for both business and leisure travelers, and increased revenues from robust used-car sales and decreased per-unit fleet costs. For example, Auto Rental News reports that Dollar-Thrifty's fleet costs fell to $136 per vehicle per month in Q1 2012, compared to $251 in the first quarter of 2011.