During the peak years of the pandemic, prices for car rentals increased significantly after providers reduced fleets and supply-chain issues became headline news. Volatility continued for a few years, but price increases in the coming year are expected to moderate as supply chains recover, according to a new report from American Express Global Business Travel.

The cost of buying and operating cars also is easing, according to the travel management company's Ground Monitor 2024-2025 report, released on Thursday (14 June). Amex GBT in the report projected rate changes for select countries in North America, Europe, Latin America, Africa and Asia-Pacific.?

Car rental rate forecasts

Amex GBT expects the?UK's car supply to fully recover by the end of the year and for demand to increase, leading to a 6 per cent rate increase forecast through March 2025, with prices slightly higher in London. With nearly two years of "frequent and severe" rail disruptions, the company's transaction data shows "pronounced growth" in UK rentals in 2023 and 2024, suggesting that the rail troubles were "encouraging business travellers to rent a car rather than take a train."?

Germany's rental rate increase is forecast at 5 per cent. Deutsche Bahn and Lufthansa "faced industrial action through 2024," and similar to the response in the UK, the company's review of transaction data found a pronounced rise in rental volumes for the first quarter of 2024 compared with the same period in 2019. In addition, planned infrastructure renewal on Germany's key rail corridors could spur rail travel disruptions for the rest of the decade, pushing up the demand for car rentals, according to the report.

For?France, the projected price growth rate is just 0.5 per cent, as the sector already was moderating at the time of the previous forecast, though rates differ across car types. Rental rates for economy and compact vehicles are projected to increase 3 per cent to 4 per cent, while premium and standard car prices could decline by as much as 15 per cent "as these categories become less popular among environmentally conscious companies and drivers."

Prices in Benelux are expected to remain flat, with a growth rate of 0.5 per cent, however in the Netherlands, where smaller cars are in demand among environmentally-minded drivers, prices could increase by 1 per cent.

In the Nordics,?prices will remain stable for the 12 months through to March 2025, according to the report. In Sweden, compact and economy car prices could even decline slightly, while rates in Norway could increase slightly across all categories. However, the TMC warned travel managers should ¡°expect to pay a premium¡± for car rentals in more remote locations in both countries.

For the US, Amex GBT projects average car rental rates to grow 2.5 per cent year over year, with possible higher increases for larger cars. This rate is half the 5 per cent figure forecast for the company's 2023-2024 report.

Sourcing tips

With the car rental sector moderating, Amex GBT suggested it may be a good time to revisit car contracts or consider finding a new provider.

The company found that in recent years, car rental companies were reluctant to commit to long-term fixed rate agreements. Amex GBT said those deals are back on the table.?

It also suggested that "you could expect to get a better deal if you renegotiate" a contract negotiated in 2022 to 2023, when prices were increasing sharply.

For those with a fixed year-over-year increase agreement, with prices moderating, there also could be better deals with new negotiations, according to the report.

Amex GBT used Prophet time series modelling to generate its car rental price forecasts for the Ground Monitor. The data came from the company's "vast data lake," augmented by inflation and gross domestic product forecasts from the International Monetary Fund.?