Vehicle rental rates could increase by as much as another 15% a leading supplier has warned, despite trading conditions improving.

After months of successive price increases by most rental companies – the latest over the past few weeks that saw rates increase by up to 8% - Sixt has warned that the industry still needs to charge up to 15% more.

“Even with the most recent increases, rates are still nowhere near where we need them to be,” said Ian Lawrence, managing director, Sixt.

“They are still 10 to 15% below where they should be.”

Avis said it is also planning to further increase the prices it charges to businesses.

A spokesman said the company will “continue to take opportunities to maximise price increases where appropriate”.

Avis has reaped the rewards of the higher rates it has been charging to companies who rent its vehicles.

“Price increases were successfully implemented to many corporate customers,” it said in its latest interim results for the first six months of the year.

Avis has also slashed is rental fleet by 16%.

As a result it reduced debt by 14%.

Sixt saw revenue increase by 7.8% during the first three months of the year, although profits at its UK operation have remained static.

Both Sixt and Avis have also confirmed that, contrary to reports that carmakers have moved away from supplying cars into short-term rental, they continue to get most of their vehicles this way.

“Between 80 and 90% of our cars we take are on manufacturer buy-back,” said Lawrence.

Avis confirmed that 80% of its rental vehicles “continue to be subject to manufacturer repurchase arrangements”, which guarantee a disposal value at the end of the holding period.

This means the carmaker rather than the rental company carries the residual risk and is contrary to manufacturers’ insistence that such deals are no longer being struck.

Renault, Fiat, VW and to a lesser degree GM are the largest suppliers of buy back vehicles into the Avis fleet.

“But we have 15 other manufacturers who each supply between five and six per cent of our cars .”

Lawrence added: “None of our traditional manufacturers have stepped back from supplying cars to us on buy back…and the discounts haven’t changed, we are still talking similar terms.”

Further confirming that carmakers remain happy to do business with short-term rental companies is news that Europcar has struck a deal with Fiat.

It will put the Fiat Punto, Grand Punto, Idea, 500, Panda, Qubo and Bravo models onto its rental fleet.