Costco has slashed its car rental service by 15%, as the company works to keep its car network in check amid an unprecedented wave of cancellations and a slowdown in demand from the UK’s big three.
The car rental firm says the drop comes after it saw a 13% drop in the number of car rentals booked at its stores last year.
The company says the cancellations were mainly due to the fact that demand for its services was “not sustainable,” and said it was also losing money on the business.
“We have seen a significant drop in car rental bookings,” said David Karp, senior vice president of corporate communications at Costco, in a statement.
“While the overall number of rental orders and the number booked at the end of each quarter have increased, we believe the number and rate of cancellions continue to be significantly higher than at the same time last year.”
The company also reported that its annual car rental revenue fell 6% in the first half of 2017, while average car rental prices were up just 3%.
A number of other companies have reported similar trends.
Costco has been hit hard by the downturn in car rentals after an early push into the sector last year, and recently reduced the number it offers, which has led to an exodus of customers.
It has also seen a number of high-profile companies, such as Apple, drop their car rental services amid rising costs.
“The cost of renting a car is increasingly out of reach for millions of American families and small businesses,” said Josh Schwerin, CEO of The Luxury Car Rentals Group, a New York-based luxury car rental company that had just closed on a deal with the company to offer its cars in-store at a cost of $1,500 a month.
“With fewer and fewer customers willing to drive and the cost of rental cars increasing, it is clear that the automotive industry is facing a critical shortage of rental vehicles, which will be compounded by a lack of demand from car buyers.”
Meanwhile, the cost per mile for an electric car has soared, with Tesla charging a whopping $5,000 for a 100-mile range per month.
Meanwhile a number are calling for the UK government to introduce new legislation to ban car rental companies from charging for miles that are lost due to driver error.
As we reported last month, a survey by the UK Auto Insurance and Repair Association (UKAA) found that the average car in the country was only 9.7 miles long.
The UKAA said that while the number is lower than a few years ago, the survey found that more than half of respondents were unsure whether they could afford to buy a car.
While UKAA is urging people to “drive less” in an attempt to save money, some are also calling for an outright ban on car rental firms.
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