- A “perfect storm” has created a rental car shortage in the United States, an expert said.
- Prices have jumped to $ 700 per day in some markets, becoming more expensive than airline tickets and hotels.
- If you want to avoid those high prices, plan ahead.
A rental car shortage is hitting the United States and could only get worse as travel increases.
Vaccinations and the easing of travel restrictions have prompted more and more people to travel again. Airlines and hotel costs are still lower than they were before the pandemic, Nerdwallet recently reported. But if you’re planning a last-minute vacation to a hot destination, you might want to check local car rental prices before you book a flight or a room.
Top tourist spots in Hawaii, Florida, Phoenix, Arizona and Puerto Rico are being hit by what some call a “rental car apocalypse.”
Two or three years ago, the average car rental in Hawaii was about $ 50 a day. Now some rental cars cost over $ 500 a day, AutoSlash founder and CEO Jonathan Weinberg told Insider. In extreme cases, prices have hit $ 700 a day, more than double the 2019 figures, Chris Woronka, senior hospitality and leisure analyst at Deutsche Bank, told Insider.
Procrastinators looking to book a rental car a week in advance in places like Florida might see prices about five to ten times the average, Weinberg said. But even travelers who plan ahead can see typical costs double or triple.
âPeople quickly realize that they have to factor in the cost of the rental car because it’s not just an add-on anymore,â Weinberg said. “It could literally be the majority cost of your trip, so people planning things at the last minute are unpleasantly surprised.”
What car rental companies say
Car rental company Hertz expects “strong demand” throughout the summer, which will cause vehicle availability to decline in parts of the country, it said in a statement sent. by email to Insider.
Enterprise echoed these sentiments, adding that it “has been working closely with our manufacturing partners since last summer to continue adding vehicles to our fleet to meet the continuing increase in demand.”
Hosts of Turo, a carsharing company, have also seen an increase in demand as traditional car rental companies have become too expensive, said Andre Haddad, CEO of Turo, in an emailed statement.
â2021 has definitely been a huge turnaround for the Orlando carsharing industry,â said Anthony Paulino, a Turo host in Orlando, Fla., In an emailed statement. Paulino is considering bookings as far back as November, he said, adding: “Half of my guests have told me they will never go back to another traditional rental company again.”
How a “perfect storm” created the scarcity
This rental car shortage can be linked to several factors, creating what Woronka called “a perfect storm”.
When the COVID-19 pandemic cut off travel to the United States, car rental companies like Hertz – which filed for Chapter 11 bankruptcy in 2020 – and Avis had to sell off pieces of their fleet to save money. But that decision has become a problem as people scramble to book vacations to hot destinations after a year without travel.
To address this problem, companies like Enterprise have moved vehicles from less popular locations to hotspots with more traffic. While this may alleviate immediate shortage issues, the locations from which cars were withdrawn could also have limited availability in the future, creating a “balance” issue, Woronka said.
Weinberg speculated that this reshuffle could also explain why rental cars sell or sell at very high rates in markets like Charlotte, North Carolina; Charleston, South Carolina; and Montana’s Glacier Park International Airport.
âYou start to wonder why these areas, and the only real logical explanation is that they are removing vehicles from there and leaving these areas with a shortage,â Weinberg said. “No matter how much car rental companies mix up the vehicles they have on hand, I just don’t think it’s going to be enough.”
As for companies that buy new cars, it is not that simple. A shortage of computer chips has started to hurt the auto industry, making it more difficult and costly for these companies to acquire new vehicles.
This chip shortage is “problem # 1,” Woronka said, preventing these companies from quickly restocking their fleets due to soaring used car prices and the dwindling number of new cars.
âIt’s like everyone is going to the emergency exit at the same time in a movie theater,â Woronka said. “It’s an unusually large and rapid increase in demand that is exacerbated by this shortage of new car availability.”
As a result, these car rental companies are likely to keep their existing vehicles longer than usual. Rental vehicles over 60,000 miles – once rare – may become typical in the months to come.
There might be a light at the end of the tunnel for car rental companies in a few months. Demand for rental cars often slows in September, which could give these companies “wiggle room,” Weinberg said.
But if you don’t want to wait until September and don’t want to pay more for a rental car than for a flight, consider planning your vacation further in advance.