Gas prices hurting car rental business

LOS ANGELES, July 14 (UPI) -- Demand is up and supply is tight for rental cars that deliver better gas mileage and car rental companies are feeling the pinch, the Los Angeles Times reports.

The travel agency holding company Sabre, which owns Travelocity, said rental bookings for compact and economy cars were up 10.2 percent in April, and up another 14.3 percent in May, compared with the same months in 2007. Rentals of mid-size, luxury and minivan models are down, the newspaper said.

However, a combination of increased demand for smaller cars and what the Times called a major shift in the cozy relationship between U.S. carmakers and major car rental agencies has led to a tight supply of fuel-efficient rental vehicles.

Car rental companies are struggling financially and stock prices of Hertz Global Holdings, Avis Budget Group and Dollar Thrifty Automotive Group have plunged in the past year -- even though rental volume and revenue are up, the newspaper said.

Mike Kane, who owns Vehicle Replacement Consulting Group, said sport utility vehicles were more popular than four-cylinder jobs six months ago, but not now.

"That's a big deal," he said. "That's 25 years of history changing."