VW-backed car hire giant plunges to £43m loss as tax hikes bite

One of the UK's largest car hire businesses, Europcar UK, has reported a significant £43.2 million loss, despite recording a profit of £7 million in 2024. The German carmaker-backed company's financial troubles have been exacerbated by rising costs and weak demand. Europcar has been operating in the UK since 1974, and it is now one of the largest car hire services in Europe.

In 2020, the group received a €500 million bailout from creditors to help cope with rising costs, following a major restructuring post pandemic. Europcar warned that rental demand had dropped by up to five percent in its most recent financial year, affecting both business and leisure hire. The company blamed government hikes to the national minimum wage and employers' National Insurance Contributions for the increased costs of vehicle repairs and refurbishment.

Additionally, rising fuel prices due to the Middle East war were also taking a toll on the business. Europcar's loss contrasts with data from the British Vehicle Rental and Leasing Association (BVRLA), which reported strong demand and transactions in the hire car industry. However, Europcar's loss highlights the challenges faced by the industry, such as over-availability of cars necessitating price reductions and low demand for electric vehicles.

Despite increasing its electric fleet by 70 percent, Europcar still faces issues with EVs having 10 percent lower utilisation rates and twice the holding costs compared to petrol and diesel cars. Europcar's managing director, Christian Øien, emphasized the company's mission to promote environmentally friendly vehicles, noting that electric vehicle rentals have increased year-on-year and have net promoter scores 10 percent higher than petrol and diesel vehicles.