Avis is warning corporates and fleet operators that they are likely to see a rise in car rental costs across the industry during 2008 and into 2009.

A combination of rising car costs from manufacturers, a stronger Euro, a slowing down in the economy and falling used car prices is likely to force all rental suppliers to pass on their increased costs to customers.

“Car costs to rental companies have risen considerably over the past 12 months and look set to rise further in 2008,” explained Paul Hainsworth, Avis Fleet Director.

“In addition to the credit crunch restricting demand for new cars, the weakening of the pound sterling against the Euro, the currency of choice for many manufacturers, is significantly reducing margins for car makers. They are already increasing their prices and may look to further restrict supply to the rental market, which some car makers are already doing,” he added.

The Budget also introduced new Vehicle Excise Duty bands for new cars which rental companies will have to pass onto customers during 2008 and 2009.

“We will work with our corporate customers to find ways of improving efficiencies within their rental agreements which will help counteract any rises. Avis is committed to keeping its prices as low as possible, but circumstances beyond our control will continue to put severe pressure on the entire rental industry,” concludes Hainsworth.