Car rental companies raise rates, cut workers to keep up

— -- To many frequent renters, it's obvious that the economic slump has hit the car rental industry.

Business travelers say they're receiving cars with more miles on their odometers and less maintenance. They also say rates are rising, and there's less staff to handle check-in and checkout.

With fewer renters, rental car companies are eliminating jobs and closing some off-airport rental locations.

"These are troubling times in the industry," says Chris Brown, managing editor of trade publication Auto Rental News.

Among recent developments:

•Avis Budget Group this month eliminated 2,200 jobs — about 7% of its employees — to help reduce costs $150 million to $200 million annually. Hertz says it laid off 2,000 workers this year, and Dollar Thrifty, Enterprise, National and Alamo also reduced their workforces in recent months.

•Hertz reported that net income dropped 94% to $63 million during the first nine months this year. There also was a 2% drop in the number of days its cars were rented.

•Advantage Rent A Car, which bills itself as "one of America's fastest-growing car rental companies," announced on Dec. 8 that it filed for bankruptcy reorganization in federal bankruptcy court. The company also said that rentals are no longer available at most of its 48 U.S. locations.

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•A Standard & Poor's research report released in late November said Dollar Thrifty "appears to be the most likely" of the big rental companies to file for protection from creditors in bankruptcy court. A Dollar Thrifty bankruptcy filing "might even result in a liquidation," the report said.

Dollar Thrifty declined to comment.

Rental car consultants and analysts tell USA TODAY that they don't expect any of the big brands to disappear. "It's not likely to happen," says John Healy of FTN Midwest Securities.

Car rental companies, however, "realize the frailty of the industry's health," Healy said in an industry report this month, and should continue to reduce their workforces and fleets.