CAR rental prices may have to rise 10-15% this year to offset dramatic increases in vehicle holding costs, according to EuroDollar chief executive Ian Mosley. He was speaking following Monday's release of EuroDollar's results for the year to March 31, 1996 which showed a pre-tax profit of £4.01 million (1995: £14.57 million) on turnover up 12% to £96.2 million (£85.9 million).

Mosley blamed the £10 million reduction in profits on 'dramatic increases' in vehicle holding costs - up £12 million year-on-year, a 185% rise - due to 'used car values in the last calendar quarter of 1995 being at an unprecedented low level when expressed as a percentage of new vehicle list price'. And with car makers cutting back on rental vehicle supplies and at the same time increasing replacement cycles, Mosley said the increasing cash difference between buying a car and selling a car meant profitability could only be maintained through increasing rental prices.

In recent months rental replacement cycles have been extended from an average of five-six months to six-seven months and Mosley predicted they could be further extended to seven-eight months and up to 20,000 miles. He said: 'If replacement cycles extend there is a cost and that will mean more price increases.' In the last six months car rental prices had increased by around 15-20% said Mosley, who predicted a further 10-15% rise to offset increased vehicle holding costs.