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- The chip shortage and other supplier difficulties continue to constrain automakers’ output and the number of rental car fleets, with rental car companies struggling to add cars to their fleets as travel recovers.
- Rental car companies had sold hundreds of thousands of vehicles to stay afloat at the start of the pandemic but are now struggling with not having enough cars or staff to meet demand.
- The rental car shortage is expected to last through the end of this year as automakers struggle to ramp up production in needed segments.
If the prices of gas and plane tickets aren’t stopping you from traveling this summer, the rental car shortage may be.
At the start of the pandemic, in spring 2020, all rental car companies significantly reduced their fleets, selling hundreds of thousands of rental cars and closing locations to avoid bankruptcy. A major rental car company was indeed on the brink of bankruptcy, but was able to get the ship back on its feet in the summer of 2021 as its remaining stocks were able to largely meet traveler demand. It helped businesses that summer 2021 demand was not at pre-pandemic levels due to ongoing issues such as late summer and fall Delta variant surges and continued weak air travel.
Now we’re seeing the pendulum swing back the other way as travelers take to the streets this summer after staying largely in place for two and a half years.
The problem is that there aren’t enough rental cars right now because automakers are still constrained by the chip shortages and other supplier issues that drove new car prices at dealerships through the roof earlier this year. Additionally, some landlords are still suffering from staff shortages after closing some locations early in the pandemic.
while there is some Signs that the supply of new vehicles at dealerships is improving, at least in some segments, have hardly caused the rental car fleets to swell. At first glance, this might seem like a problem for rental car companies, but in reality it’s a far bigger problem for those who want it Rent the cars, as companies simply price daily rentals as needed. And we all know what the means.
With airline ticket prices and rental car prices, it’s becoming cheaper and cheaper for some summer vacationers to skip both altogether and drive to their destinations in their own cars and brave high gas prices instead.
“We’re still going to Virginia Beach in July, but we’re just not going to fly and rent a car there — it’s overall too expensive,” said a family from upstate New York car week. “We’re going to go there in one day this year so we don’t have to deal with airlines and stuff like that. I don’t want to rent a car there anyway. Yes, petrol will be expensive, but that goes for everyone.”
With the rental car shortage still tied to car production being constrained by the chip shortage, the current situation does not appear to be improving until the chip shortage is resolved and automakers are able to ramp up production of cars in segments that are in rental fleets go . There’s a difference, as automakers don’t typically put pickups or foreign sports cars in rental fleets — small domestic and foreign sedans are still the bread and butter of rental companies.
The problem is that production of less expensive cars ($25,000 or less) has suffered from the chip shortage and cars currently in rental fleets are mostly holdovers from before the pandemic hit. Many of them were also sold in the summer of 2020 as rental companies downsized their fleets. As a result, cheaper vehicles are currently in short supply and travelers cannot rent them at the low prices they have seen in the past.
Popular, frequently requested vacation rental models like the Jeep Wrangler now charge hundreds of dollars a day, even when travelers book them weeks in advance. What could change this situation in the short term?
As with petrol, experts say a sharp drop in demand would push rental rates lower, but that doesn’t seem likely ahead of a busy summer travel season – the busiest the nation could have in three years. Also, rental car companies currently have little incentive to offer more cars because the money they are making from current fleets is largely sufficient. Landlords can simply top up more for the smaller number of cars they have because they are all in the same boat.
“We usually fly to Florida for the entire fourth week of July to visit family,” said one Maryland family car week. “We didn’t do it last year or the year before that, but now it just looks too expensive everywhere. I’ve looked at plane tickets to Tampa and car rentals there and it just looks expensive everywhere.”
Is there a way to avoid the high fees? Experts have some suggestions, but none of them are particularly new.
First, don’t rent at your destination airport, as prices are always highest there. Instead, take public transport or a taxi to a rental that is half an hour or more away, as prices are lower there. Secondly, you should buy rental cars months in advance and consider vehicles that are not your first choice in order to get a better price and check prices frequently even after booking as the situation may change in the meantime. The same goes for peer-to-peer car rental apps like Turo. Third, even if renting a car was your usual or preferred method of travel, see if you can avoid renting altogether and rely on taxis or driving service apps.
Finally, when is the distance to your destination some drivable, check if driving your own car is cheaper and time saving at the end of the day instead of flying and renting.
Are you planning to rent a car this summer or do you have other plans when you travel? Let us know in the comments below.
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