Amex GBT Predicts Stabilisation in Car Rental Price Hikes

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ByTravelling For Business

June 18, 2024
American Express Global Business Travel forecasts a moderation in car rental price increases as supply chains recover. Discover the projected rate changes across various regions and strategic sourcing tips.American Express Global Business Travel forecasts a moderation in car rental price increases as supply chains recover. Discover the projected rate changes across various regions and strategic sourcing tips.

During the peak pandemic years, car rental prices surged due to reduced fleets and supply chain disruptions. However, these price hikes are expected to moderate as supply chains recover, according to American Express Global Business Travel’s (Amex GBT) latest Ground Monitor 2024-2025 report.

The report indicates that the costs of acquiring and maintaining vehicles are also decreasing. Amex GBT’s projections cover car rental rate changes across North America, Europe, Latin America, Africa, and Asia-Pacific.

Car Rental Rate Forecasts

In the UK, Amex GBT anticipates a full recovery of car supply by the end of the year, with a 6% rate increase forecast through March 2025. Prices are expected to be slightly higher in London. The company’s data suggests that frequent and severe rail disruptions over the past two years have led to significant growth in car rentals, as business travellers opt for cars over trains.

Germany is projected to see a 5% increase in rental rates. Industrial actions by Deutsche Bahn and Lufthansa, along with planned rail infrastructure renewals, are expected to continue driving demand for car rentals.

In France, the projected rate increase is minimal at 0.5%, as the sector had already begun to moderate. Rates for economy and compact vehicles are expected to rise by 3-4%, while premium and standard car prices could decline by up to 15% due to decreasing popularity among environmentally conscious consumers.

The Benelux region is expected to experience flat growth at 0.5%. In the Netherlands, prices for smaller cars could increase by 1% due to high demand from eco-conscious drivers.

In the Nordics, prices are forecast to remain stable through March 2025. Sweden may see slight declines in compact and economy car prices, while Norway could experience slight increases across all categories. However, rentals in remote locations may command a premium.

For the US, Amex GBT projects a 2.5% year-over-year increase in average car rental rates, with potentially higher increases for larger cars. This is a significant reduction from the 5% increase forecast in the previous year’s report.

Sourcing Tips

With the moderation in the car rental sector, Amex GBT suggests it may be an opportune time to revisit car rental contracts or explore new providers. Recent reluctance by car rental companies to commit to long-term fixed rate agreements appears to be waning, presenting opportunities for better deals.

Amex GBT advises that contracts negotiated in the high-price years of 2022 to 2023 may now be ripe for renegotiation. Additionally, those with fixed year-over-year increase agreements might find more favourable terms in the current moderating market.

Amex GBT’s car rental price forecasts were generated using Prophet time series modelling, drawing on the company’s extensive data, supplemented by inflation and GDP forecasts from the International Monetary Fund.