Car leasing customers are set to pay more in the wake of the economic meltdown.

Plummeting residual values make the prospect of higher rental charges inevitable next year, confirmed Renault fleet and commercial operations director Keith Hawes.

“After a difficult year and a difficult September, all I can say is that dramatic falls in residuals can only make the situation worse and it could take 18 months to turn it around.

"It would not surprise me if the result is consolidation in the leasing market,” he said.

“Most rental firms have standard holding costs to cover their funding and depreciation but they are taking a pounding because several areas of the market have taken a hit in the last few months.

"Things are particularly bad in the D-sector and I think there will be no alternative to higher charges being passed on to customers,” Mr Hawes told Fleet News.

Speaking at the Paris Motor Show, he said the leasing industry was also in line to suffer as manufacturers begin pulling back from loss-making business.

“I look at some of the deals being done in order to move volume and wonder just how they can be sustained,” he said.

“By the end of the year, Renault used car stock will be low but I know of other makers who are already stuffed with stock. We are in a very unhealthy situation.”

Mr Hawes said that over the last two years, the French firm had cut its annual rental volumes from 25,000 to 8,000.

“We couldn’t predict what was going to happen, but this has turned out to be a positive move,” said Mr Hawes.

“As the Laguna was not doing as well as we’d hoped, it would have been easy for us to push it into short-churn areas, but we decided to allow the car to freefall to its natural level in the marketplace.

"As a result, we’ve not had to force it through the auctions at silly prices.”

He said Renault was on course to achieve 60,000 car and 17,000 van registrations in the fleet sector this year, a result likely to put the brand in seventh position.

“That is a far cry from five years back when we were the third biggest supplier, selling almost 100,000 cars and 118,000 vans.

"But instead of buying our currency up to a year in advance, we operate on a monthly basis and that has put us in a better position as sterling has slumped,” he said.