Car rental rates are expected to stabilize after more than three years of volatility, according to a new report released today from American Express Global Business Travel (Amex GBT), however, Ground Monitor 2024-2025 projects rates in Canada to still increase by 3.4% in the period ending March 2025.
The report also states that Montreal, Toronto, and Calgary may see moderately higher growth rates as a result of the higher costs associated with providing and staffing city car rental locations.
Globally, car rental rate predictions include a 3.5% increase in US, 6% in the UK, 5% in Germany, and 4% for Australia.
As more cars readily available to rent as the auto supply pipeline opens up, this year’s forecast is a significant moderation from last year’s when it forecasted that average prices for car rentals would increase by 5.0%
After a prolonged period that saw hefty price increases, the car rental sector looks to be entering a new equilibrium, says the report. In most countries, prices will continue to rise but more slowly than seen recently. The auto production issues that have dogged the industry are now in retreat. With car rentals stabilizing, consumers should face fewer challenges sourcing the cars they need.
“Ground transportation plays a crucial role in enabling businesses of all sizes, across many sectors, to operate efficiently – and is a key factor in the journey experience for travellers,” says Gerardo Tejado, Sr. VP, Amex GBT.
Fuel prices stabilize
Fuel prices are also expected to stabilize. The World Bank expects oil prices to decline in 2024 and further moderate in 2025, due to weak global economic activity and increased supply from the US and Russia.
Cheaper oil should eventually mean lower fuel prices at the pump. But the report warns geopolitical risks – and falls in refinery capacity – could push prices up again.
EV anxiety
Short-term Electric Vehicle (EV) rentals appear to be decelerating. In 2023, Hertz announced it was selling 20,000 EVs in the US, about one-third of its global EV fleet in a shift back to gas-powered cars.
Range anxiety – the concern about the distance an EV can travel on a single charge and the fear of getting stranded during the journey – is one of the biggest barriers to drivers getting behind the wheel of an EV.
In contrast, corporate fleets are enthusiastically adopting EVs to meet their sustainability targets. Members of Climate Group, a global non-profit representing more than 500 multinational businesses with a mission to drive climate action, states that members of its EV100 initiative are collectively operating 57% more EVs this year than last.
Favourable tax treatment is a strong incentive to make the switch. In France, there is a law mandating a minimum proportion of EVs in company fleets.
Younger people open to alternative ground transport options
A 2023 study by McKinsey found that younger people (aged under 30) were less likely than older generations to use private cars and want to make more use of public transport and micromobility.
There was also a marked openness to using shared mobility options including car sharing. Amex GBT confirms its experience of working with clients in Europe bears this out; ride sharing options are a driving force of ground transportation.