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Fall Travelers Face Higher Car Rental Costs

September 29, 1993

NEW YORK (AP) _ Rental car chains are raising rates around 10 to 15 percent in many cities this fall, reacting to what they say are huge increases in their costs of new cars.

The Hertz Corp. started the latest price hikes and Avis Inc. quickly followed.

″For the second consecutive year, the car rental industry is facing a 30 percent increase in fleet costs,″ Hertz spokesman Brian J. Kennedy said.

Automakers have been reducing their discounts to fleet customers, rental company officials said.

Avis Inc. announced similar rate hikes. Daily rates for both companies will go up between $2 and $5, while weekly rates increase an average of $20. The new rates are scheduled to take effect next week.

Hertz said it will now cost $152.99 per week to rent a mid-size car in Los Angeles - up from $132.99 earlier this month. Daily mid-week rates go to $44.99 from $39.99.

A check of Avis rates in Houston showed the price of a mid-size had gone from $41.99-a-day to $46.99-a-day.

Both companies limited their mid-week increases in Orlando, Fla. to $2 a day.

Most other national rental car firms either have, or plan to, raise rates as well. National Car Rental said the company has begun implementing increases in some cities. Other rate hikes of 10-15 percent are expected in the near future.

Budget Rent A Car begins charging new rates next week. David Sparks, senior vice president for marketing and sales, said the $5-a-day and $20-a-week increases will only bring the company ″back to where we were in 1992.″

Sparks said new car purchases account for as much as 55 percent of Budget’s operating costs and a ″30 percent hike in those expenses is a big jolt to absorb.″

Alamo Rent-A-Car, meanwhile, said it had not yet instituted rate hikes. Spokeswoman Sandy Richards said the company was studying the market and planned to make a decision in the coming weeks.

Smaller, regional car rental companies - which frequently undercut their national rivals by holding down operating costs - are also feeling the pinch.

Value Rent A Car, which serves Florida, the Southeast and portions of the Southwest, said its prices were headed up, too.

″We’re forced to raise rates,″ company spokesman John Salagaj said Wednesday, adding that his firm’s prices will still be lower than most of its bigger competitors. ″The higher cost of new cars requires it.″

Other regional companies are expected to adopt a similar strategy: hike rates in line with the industry leaders while keeping them lower overall.

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