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

One of the UK’s biggest car hire businesses has taken aim at government tax hikes after it plunged to a £43.2m loss.

Europcar UK, which is backed by German carmaker VW, recorded a profit of £7m in 2024 but its fortunes went into reverse gear a year later amid rising costs and weak demand.

Europcar has been operating in the UK since 1974 and has become one of the largest car hire services in Europe.

The Europcar group underwent a major restructuring post pandemic, with the car hire giant receiving €500m from creditors in 2020 as part of a plan to help deal with rising costs.

The group, re-purchased by Volkswagen in 2021 after being sold in 2006, warned that rental demand had slid by as much as five per cent in its most recent financial year, impacting both business and leisure hire.

The company also blamed government hikes to the national minimum wage and employers’ National Insurance Contributions for the rise in costs of vehicle repairs and refurbishment.

Rising fuel prices caused by the war in the Middle East were also taking their toll, the company warned.

Over-availability of cars

Europcar’s loss contrasts with data from the British Vehicle Rental and Leasing Association (BVRLA), which conducted a study on the health of the hire car industry and said that demand and transactions was “strong”.

The BVRLA Rental Outlook Report concluded that supply was the issue as the over-availability of cars was necessitating reductions in prices to remain competitive.

Another issue highlighted in the report was that demand for electric vehicles (EVs) was minimal.

The report said utilisation rates of EVs are 10 per cent lower than petrol and diesel cars, while holding costs for electric cars are twice as expensive.

However, Europcar reportedly increased their electric fleet by 70 per cent from the previous year, with EVs now making up 13.9 per cent of their fleet.

Christian Øien, managing director of Europcar mobility group UK said: “At Europcar we are on a mission to remove barriers that hold motorists from choosing environmentally friendly vehicles.

“Not only have we seen an increase in EV rentals year-on-year; we have also achieved net promoter scores for electric vehicles that are 10% higher than for petrol and diesel vehicles.”

Europcar UK has been contacted for comment.