If you’ve hired a car in the UK recently, it was probably memorable for the wrong reasons.
You’ll have spent ages online finding an appropriate car, and have paid an eye-watering sum. Then you’ll have got to the forecourt to collect your car from a man in a hut, and there’s yet more waiting around.
This time, though, there’s hard selling. A bigger car, maybe? Or a separate fee for an extra driver, or a sat nav, or a child seat? Surely you need insurance excess protection so that an errant stone or car park ding won’t cost you a week’s wages. The already-high price quickly becomes astronomical.
Hire a Ford Focus for this May’s half-term holiday week and it could cost you a wallet-wilting £817. That’s before you’ve handed over your credit card for the damage deposit. You could have got a taxi there and back for the same price. Yet not even all that expense guarantees a smooth ride, as scorching online customer reviews show.
After specifying a five-door model to fit two small children plus pushchair, Laura Cairns was given a three-door Fiat 500. Hardly surprising that she wrote on Trustpilot: “Absolutely terrible… I am essentially car-less with absolutely no help from [the company].”
Another customer, Liz Telford, wrote: “If I could give a zero rating, I would… charged me £450 for something that could not have possibly happened in my care.”
Whether or not you have a car hire disaster or what you feel is an unfair fee to share, it seems like we all know somebody who does. Many of the leading firms have a Trustpilot review of “bad” or “poor” from a customer.
Even if everything goes to plan, you’ll still pay through the nose. Costs peak in the summer and over Christmas. In the first week of August last year, the average price across the six biggest companies (Hertz, Budget, Europcar, Enterprise, Avis and Sixt) for a medium compact car like a Ford Focus was £577.42 without extras.
Bumps in the road
Figures provided to The Telegraph by iCarhireinsurance.com show that car hire costs are falling. Even so, a Focus for this May half-term week will be an average £358 across the big six companies. Bizarrely, it’s much cheaper to hire a Ford Transit Courier van for the same period, just £245.
Then there are the dreaded extras. Add a second driver to the insurance, not unreasonable, and it’s £107 more for the week. If you need a child’s seat, a legal requirement for some, it’s £103.26. A sat nav for the week is £85.53. Add in excess protection (“Super Damage Waiver”) – on average £163 for the week – and hiring the car in May will cost you £816.79, or some £102 a day.
That Super Damage Waiver could save you big bucks. When you hire a car, part of your fee covers comprehensive insurance. But damage the car, and you must fork out for the excess, which on average is a holiday-ruining £1,433 among the big six companies in 2024. The Super Damage Waiver will make that excess charge go away.
Alternatively, you could buy excess protection from an independent such as iCarhireinsurance. They’ll charge just £46. For the year. Including Europe. No wonder UK government guidance states: “It’s often much cheaper buying from an independent insurance provider. You may get better cover too.”
The same guidance also claims: “Renting a car doesn’t always run smoothly. Things can go wrong before, during or after the rental…Damage charges are the single largest cause of complaints.”
I have some experience with this. A car I hired was covered in light bodywork damage when I picked it up. Upon return, the company claimed I was responsible and withheld my £1,200 deposit. Fortunately, I had dated photographs which proved the damage was present when I hired the car. But getting those pics to the right person for a refund when numerous “customer service” emails went unanswered was difficult and stressful.
Hiring a car in the UK has rarely been enjoyable but its current pricey and parlous condition goes back to the dark days of the pandemic. “Covid hit the hire car industry hard,” says Adam Forshaw from the British Vehicle Rental and Leasing Association (BVRLA).
“A large number of businesses had to close because no one was travelling. The industry needed to cut costs and raise cash so in 2020, fleet sizes reduced by 31 per cent on average.” Such was the shock to the industry that giant Hertz filed for Chapter 11 bankruptcy in the United States.
Then as lockdown lifted, hire car companies were hit by the new-car shortage caused by lack of computer chips. “When car makers did get new vehicles, they prioritised more profitable retail sales; rental companies were back of the queue,” Forshaw revealed.
The result was that hire car companies either couldn’t fulfil demand from newly liberated customers, or had to pay a premium for cars. Either way, they hiked prices. Mark Bower, the founder of money saving website MoneyMaxim reveals: “Car hire was dirt cheap during Covid. Then prices went the other way. This is the first year since the pandemic when prices are returning to normal.”
And the car hire companies are feeling the pinch like the rest of us. Having fewer cars to hire has meant they’ve been trying to cover their outgoings with fewer hires while costs have been spiralling.
The amount we pay to hire a car doesn’t just account for the depreciation of the car plus wear and tear. It also covers maintaining those cars, staff, building and parking costs – and hire car companies need a lot of parking. It goes some way to explaining why on a turnover of £89.6 million in 2022, Hertz UK made just £2.9 million (3 per cent) profit.
So, expensive for customers, barely profitable and with a well-earned questionable reputation – the big six companies have an average Trustpilot score of 1.7 out of 5 – what is the future for hiring cars in the UK?
According to Future Market Insights, the UK car hire industry will have a compound annual growth rate of just 5.6 per cent between 2022 and 2032. Not so stellar yet arguably, the business faces an opportunity like never before. People are increasingly moving to cities which are becoming ever more expensive and hostile towards car owners.
Forshaw explains: “Rental takes cars off the road if it’s done effectively. I’ve seen data showing that having rental cars in the right place can reduce car ownership.”
So hire car companies could play an important role in getting people out of their cars to reduce transport’s environmental impact. But only if they were cheaper, more flexible, more trustworthy and more customer-friendly.
Club culture
Instead, people are either keeping their own cars or using car clubs, where companies like Co Wheels and Zipcar provide you with a motor for as little as £5.50 an hour or £44 a day.
CoMoUK, the national organisation for shared transport, says the average shared car replaces up to 22 owned vehicles. Robert Schopen from Co Wheels told us: “Our pricing is designed for people who want the car for a day or two. It’s all about convenience. Our cars are in neighbourhoods, hire cars tend to be at airports or on business parks.”
Sustrans, which campaigns for more sustainable transport, claims a car owner covering 6,000 to 8,000 miles a year could save up to £3,500 annually by binning their car in favour of a car club. And there’s the environmental benefit: car club cars produce 27 per cent less CO2 than the average motor, CoMoUK says.
The hire car industry is also forecast to struggle with the transition to electric vehicles (EV).
“There’s the problem of getting power to depots in order to charge cars on site,” says Forshaw. “And then there is the purchase price. We’re seeing the price differential between EVs and combustion engine cars close but it’s still impossible for rental companies to offer customers like-for-like at the same price.”
The higher cost of repairing EVs has caused some rental providers to think twice about them, too, with Hertz in the US selling off 20,000 EVs in January. The move caused enough market disruption to impact resale prices across the whole market, further disincentivising large fleets from investing. Car clubs, meanwhile, see the switch to EVs as an opportunity.
Schopen adds: “In cities it’ll be physically impossible for everyone to own an EV because there won’t be the charging infrastructure. We’re aiming to have our entire fleet electrified by 2027 because we’ll need to provide cars for cities that become zero emissions zones.
“Also, car makers are moving away from small, low-cost city cars so there’ll be fewer used examples which will push more people towards car clubs.”
Currently, there are over 767,000 car club members in the UK, more than double the 2019 number. Car clubs pose such a threat some hire car companies, such as Enterprise and Avis, which bought Zipcar, are meeting the challenge head-on with their own operations.
Despite the added competition to hire car companies, the experts we contacted agreed prices are unlikely to fall much below their current level.
And that means over the coming years, you can expect more of the same – the expensive, annoying, faintly disreputable same – when hiring a car.
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