First Gas, Now Car Rental Rates Go Up

Hertz Corp. this month raised its car rental rates the same day it announced record second-quarter earnings. Avis and Budget were among the companies that promptly matched the increases.

Daily and weekend rates went up $3 per day, Hertz said. Weeklong rentals reserved 21 days or more in advance rose $10 per week; those reserved less than 21 days ahead went up $20 per week. Many business travelers escaped the increases because Hertz excluded contract rentals--that is, rentals for which businesses have contracted for certain rates.

While noting that earnings were up 18% from last year, Hertz contended it needs higher prices to offset rising inflation in interest rates, cars and wages.

The increases come amid pressure on car rental companies from skittish investors who, despite strong demand for rentals in a booming economy, have driven down the companies’ stock prices during the last year. The investors worry about rising interest rates and new price wars breaking out among car rental companies, experts say.

At Avis, spokesman Greg Faulhaber last week confirmed that “we promised stakeholders that we’re not going after market share”--corporate-speak for grabbing customers from competitors, usually by undercutting prices.