The economic downturn has had a dramatic effect on the number of rental cars now available in Ireland and this could have serious consequences for tourism according to a new report, with the impact also likely to be felt by Ireland’s accident repair market.

Ireland’s car rental fleet has contracted from around 30,000 cars in 2006, to around 12,500 this year and this is costing airlines, hotels and tour companies, as prospective visitors turn elsewhere due to the lack of transport options.

The report, Car Rental Fleet Shortages Tourism in 2010, was compiled by a number of representative bodies from the tourism and car rental sectors. It says that the vehicle shortages have come about due to changes in the VRT rebate system, which makes dealers less inclined to do short-term deals with rental companies. It also says that the scrappage scheme means that the market for ex-rental vehicles is smaller. Overall it says that the number of vehicles available for rental here is about 10,000 below what it needs to be and such rates are bound to rise. It goes on to say that the consequences for the tourism industry could be as much as a €260 million loss in revenue.

Car rental costs in Ireland, when compared to other similar markets, are already high with visitors paying an average of €400 per week here, compared to just over €200 in Scotland. Some estimates suggest that weekly rentals here could rise to as much as €100 per day.

As well as impacting on tourism, these rising costs are also likely to hit the motor trade, especially the bodyshop business. The provision of replacement cars is now a crucial aspect in securing most insurance work and insurance companies are notoriously frugal when it comes to daily rates. This means if bodyshops do not make their own courtesy car arrangements, or closely monitor the cost of hire cars, they could end up having to make up serious shortfalls on rental costs.