Car Rates Soar In United Kingdom

<H1>Car Rates Soar In United Kingdom</H1><H3>By Amon Cohen</H3>It happened in the United States, and now it's happening in the United Kingdom: Car rental rates are skyrocketing this year with no end in sight.

In part, the increases-of at least 10 percent and in some cases of more than 20 percent-reflect a hardening of prices across the country's entire travel industry, following an upturn in the economy and the consequent resurgence of business travel.

But several factors peculiar to the automotive industry explain why car rental charges are accelerating more rapidly than others. (For more, see Page E7). The major problem is that car manufacturers are restricting the number of vehicles they sell to rental companies in order to control the number of nearly new cars in the secondhand market. Manufacturers also are pruning the levels of discounts and marketing funds that they give to rental companies, while insisting that those companies retain their vehicles for longer periods of time before selling them.

The net result is that rental companies are paying more for their vehicles and watching their residual values plummet. "I would say there has been something like a 25 to 30 percent increase in costs over the last 18 months," said Alun Cathcart, chairman and chief executive of Avis Europe.

And Hertz Europe vice president for strategic planning Robin Davies estimates the rise in fleet costs to be 30 to 50 percent per year.