Hertz to Raise Car Rental Rates up to 10%; Rivals to Follow

Hertz Corp., the nation’s largest car rental company, today announced plans to boost car rental rates 8% to 10% to offset rising costs.

The rental car industry’s trade group said it won’t be long before rival companies such as Avis Inc., Budget Rent a Car Corp. and National Car Rental Systems Inc. match Hertz.

Hertz’s price increases are effective immediately, except in Hawaii, where prices will be increased starting Oct. 1.

In most U.S. cities, the price increases will boost daily rates by $3 to $5, weekend rates by $2 and weekly rates by $10 to $20. The daily rate on a mid-size car at Chicago O’Hare Airport, for example, is up $5 to $49.99, while the weekly rate is up $15 to $100.99. The effect on discount rates will vary.

National and Avis executives said they expect to raise prices soon, while executives at Budget weren’t immediately available for comment.

“Usually, Hertz or Avis move first to raise prices and then the others follow,” said Jan Armstrong, executive vice president of the American Car Rental Assn. in Washington.

“The problem is many times car rental companies can’t maintain the price increases because of competition. It will be interesting to see what happens this time.”

Auto prices paid by rental fleets have been rising at an annual rate of 25% to 30%, industry officials said.

“This is the third year in a row that car costs are up 25% to 30%,” said Michael Olsen, National’s spokesman.

“As we start taking delivery on 1995 cars, we are incurring these costs and it’s pretty darn dramatic.

“We’re going to have raise prices,” Olsen said.

“It’s competitive out there so often these price increases don’t often stick. I hope the prices stick this time.”