As holiday costs soar, car hire is getting cheaper

Every part of your trip might feel more expensive this year, but there is a glimmer of good news for those renting a vehicle abroad, says Nick Trend

While air fares, hotel rates and package holiday prices continue their inexorable rise, there is some relief on the horizon for anyone hiring a car this summer. After a surge in rates since the pandemic, the cost of renting a vehicle from holiday airports is finally falling.

New research published by Which? shows that prices have dropped by up to 47 per cent compared with last year. The data (which was supplied by the broker Zest Car Rental) covered the cost of 3,000 one-week rentals at 13 popular holiday destinations, Orlando, Malaga, Faro and Corfu, both this Easter and during the 2024 summer holidays.

At Easter, prices compared with last year (see tables, right) were well down in 11 of the 13 destinations. The biggest drop was in Funchal, Madeira – a 35 per cent fall. Only Rhodes (up 36 per cent) and Nice, where prices nearly doubled, saw an increase over last year.

The picture this summer is also looking rosy. There were price drops in nine of the same 13 destinations, although Nice was again more expensive than in 2023.

So why, with those few exceptions, have prices started to drop, even though inflation has remained persistently high? During the pandemic, car hire companies sold off many of their vehicles because of the collapse in demand. Then, in 2022, as travel suddenly recovered, they struggled to replenish the fleets. Prices soared as a result. Research by Telegraph Travel recorded rises of between 59 and 158 per cent since summer 2019 (telegraph. co.uk/tt-car-hire-cost). The Which? report did not cover hire costs in the UK but a 2023 survey by icarhireinsurincluding ance.com showed that prices here have also risen since the pandemic.

Last year the picture was more mixed, with prices still rising in some destinations, but falling in others. Now, however, it seems that rental car stocks have largely returned to normal levels and greater competition is starting to have an effect.

But despite the latest falls, according to Which?, average prices overall are still significantly higher than they were in 2019 – they are up by 51 per cent at Easter and 53 per cent in the summer.

COMPARE PRICES

Rates for the same car can vary enormously depending on how you book. Brokers, which negotiate with local and international suppliers, are usually the best places to start when comparing car-hire prices. Zest (zestcarrental.com) and Auto Europe (autoeurope.co.uk) are two of the best for bargains. However, always make sure you are comparing like with like and have included all the extras (see below).

BOOK EARLY

Typically people book their hire cars only a couple of weeks or so ahead. But if you are planning a peak-time holiday, the normal rule is that the earlier you book, the more likely you are to get a reasonable deal.

PAY TO SECURE THE BOOKING

If you pay at least a deposit when you book, you guarantee that you will be able to get the car at the agreed price. Sometimes – if demand is high – unscrupulous suppliers who knew that they could sell cars at higher prices have been known to cancel bookings made without a deposit so that they can re-sell them for a higher profit.

CHECK THE CONTRACT

1. Make sure you understand the collision damage waiver (CDW) and theft protection excesses. Most are now at least €1,000 (£850) so even if you are told insurance is included, you will be liable for that amount if you damage the car. Take out additional cover in advance of collecting the car. Most car hire companies sell some sort of policy either to reimburse the excess or reduce it to zero, though independent insurers (such as reducemyexcess.co.uk, insurance4carhire.com and icarhireinsurance.com) are usually cheaper.

2. Check your credit card limit is high enough to leave enough deposit to cover the excess.

3. If your flight is delayed by more than one hour after the start time of the rental, phone the rental office at the airport – otherwise your reservation may be cancelled.

4. Check that no unwanted extras have been added to the contract you are asked to sign.

5. Inspect the car to check that every scratch or dent on the bodywork is marked on the contract. Make sure you take photographs of all four sides of the car – and also the milometer on the dashboard.

6. Double-check the fuel policy. The easiest is one which gives you a full tank on collection on condition that you return it in the same state. Remember to keep the receipt from the petrol station where you filled up before returning the car.

7. If the vehicle is not inspected immediately on return, take photographs to record its condition.

HOW TO FIND A BARGAIN CAR-HIRE BOOKING