Car-hire credit crunch drives up costs for holidaymakers in Spain

Photograph: Frank Baron/Guardian

A shortage of hire cars in Spain is leading to inflated costs for holidaymakers and a complete lack of available vehicles in the worst cases.
Popular holiday destinations such as Alicante, Málaga and Murcia have been particularly badly hit as hire companies reduce fleet sizes to trim operating costs in the face of recession.
Over Easter and the May Day bank holiday, some visitors were unable to reserve cars in these places. The same problems look likely to face those booking in August, particularly over the bank holiday weekend.
The shortage of stock is down to a number of factors, all of which are tied to the credit crunch and recession.
Hire companies say they were hit by a lack of affordable finance from banks in the first half of the year, which prevented them from buying new stock. Some companies have been selling nearly-new cars to pay off loans, say specialists, but are not replacing them. Concern they will not get the same values that they are used to in secondhand car markets is adding to their reluctance to replace old stock.
Rental businesses in the Spanish resorts have been downsizing their fleets since last summer, says Bob Atkinson of Travelsupermarket.com. "This is as a result of the drop in visitor arrivals from the various European markets that started in the autumn of last year," he says. "It has seen visitors through the winter down by up to 18% from the UK alone - the single biggest provider of flight arrivals into Spain.
"This has meant that there is less oversupply of cars in non-peak months such as June. However, in peak months such as July and August there is now a clear shortage of cars."
Bath-based hairdresser Clive Trotman travels with his wife and two daughters to Moraira on the Costa Blanca every year and cannot believe how much hire car charges have rocketed. In previous years, he has paid £200 for a fortnight for an economy-size car; this year, the cheapest he can find is €600 (£515). Some firms were quoting more than £1,000 for modest-sized cars.
"The car hire has worked out as the most expensive element of my holiday. The return flights for all of us are only £360," he says.
Trotman has since discovered that a lot of his hairdressing clients are in the same position. "One lady who has a villa in Mallorca managed to book a car in January for July for £200. Her daughter started looking a few weeks ago and can't get cheaper than £700."
Another of his clients has just paid £450 for the two-week hire of a Citroën 2CV in Barcelona. "He can't even fit into it properly, but he's not prepared to pay twice as much for something else," he says.
Trotman asked the woman who owns the villa where he and his family stay if she could find something cheaper locally for them. She couldn't - and she was amazed at the prices. "The local hire firms didn't have any cars at all," he adds.
In other countries, there is nothing like this movement in charges, according to research for Cash by Travelsupermarket.com.
In neighbouring Portugal, prices are the same as last year. In France, Italy, the UK and the US, there have been marginal increases in cost year on year, but availability issues are hardly on the same level as they are in Spain.
Spain is still the most popular destination for British holidaymakers. A survey by Currencies Direct found that 93% of the 2,300 people it questioned are taking a holiday overseas this summer, with a third of those heading for Spain.
Interestingly, nine destinations in the Balearics and on the Spanish mainland accounted for almost 30% of all car hire searches on travelsupermarket.com in the last two weeks.

Road to savings

Book early
Getting in early usually means cheaper prices, but this year the tactic is crucial. According to Car Hire 3000, a broker of car rentals, if you are booking now for travel within the next six weeks, the Balearic Islands - including Mallorca, Menorca and Ibiza - are double the price of this time last year and expect to be sold out on some dates this summer. In mainland Spain, prices are up to 70% more expensive, with stocks running low on many car types. Anyone
travelling at other peak times - the October half-term and Christmas/New Year - are advised to book soon. At other times, prices plunge. The cost of a mini economy car in Mallorca for the last week of September starts at £115 on travelsupermarket.com - £219 cheaper than in July.
Think big - and wide
Price increases are greater in the smaller car categories, say Car Hire 3000, Auto Europe and Holiday Autos, as these are always in higher demand. With larger cars, the supply is tighter. Don't assume it's cheaper to go direct to a hire car company. The largest companies and brokers have stock, but at a price. Websites that search for cheap deals include travelsupermarket.com, carrentals.co.uk, carspain.com and car-hire-centre.co.uk. When we sought a price for a small car from Málaga airport for two weeks starting 1 August, the lowest was £488 for a Chevrolet Matiz through travelsupermarket and carrentals, rented from Economy Car Hire. The highest price quoted was £807 for a Mini Cooper from Hertz. Local companies often have better prices, but if you leave it late many will be out of stock.
Keep an eye on insurance
Even when you have found the best deal, you will inevitably end up paying for some extras - petrol for a start. The highest item is always the extra you pay to reduce your liability bill in the case of an accident, or super collision damage waiver (CDW) as it is known. This can reduce your excess from, say, £700 (often more than the car hire) to £150. If you hire a car more than once a year, it might even be worth taking out a policy to cover this particular extra. Insurance4carhire.com will cover you for this for an annual premium of £49 (Europe) or £65 (worldwide).

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