Holidaymakers who have booked a car for their summer or autumn getaway can make substantial savings by cancelling and rebooking the vehicle as prices drop.

A study of European rental prices has found that costs have almost halved since January, when many people booked both their holiday and transport.

As providers often offer free cancellation up to 48 hours before the booking begins, consumers can now typically cancel their existing vehicle and then rebook the same one at a much cheaper price.

ICarhireinsurance.com, which provides excess insurance, says the average cost of a weekly car hire was £578 at the beginning of the year, but had now dropped to £317 – a 45% saving on a medium compact vehicle such as a Ford Focus.

In one example, a Peugeot 208 that was rented from Nantes airport in France for 11 days cost £398 when it was reserved in March. This same booking now costs £230.

The prices can reduce at the last minute when car companies do not want to be left with unused vehicles, says Ben Wooltorton of iCarhireinsurance.com.

“People should consider booking in advance to make sure they secure a vehicle for their planned trip, but with a company offering free cancellation – usually 48 hours’ notice – and then check prices again before they travel.”