Why Are Car Rentals So Expensive Now

Why Are Car Rentals So Expensive Now – If you’ve found yourself in a sunny US destination for the past month and tried to rent a car, chances are you’ve been faced with sprawling lots without cars or shocking rental prices. The spring break season, coupled with a slew of statewide reopenings and a slowdown in consumer spending, has resulted in significant car rental shortages in a number of cities major and tourist cities around the United States, with rental prices approaching several hundred dollars per vehicle per day for very simple bikes.

A quick survey of rental companies found that daily rates for modest vehicles in high-demand areas exceed $300 per day, while a number of hard-hit regions — such as the Gulf Coast, Southern California, Florida and the Carolinas — had seen charges. north of $500 in March. Florida was particularly hard hit last month with few cars available at most airports for the influx of spring breakers.

Why Are Car Rentals So Expensive Now

“We couldn’t get a rental car at all,” said one family traveling from Washington, D.C. for Orlando, Florida.

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. “We were planning to take a car and stay about 10 days to visit Jacksonville but the options on the websites just weren’t there. We had to reserve cars weeks in advance or Uber a few times when we needed to.”

The islands sold in 2020 and have not been rebuilt since then. Hawaiian car rental companies do not have the easy ability to relocate cars from nearby locations to meet changing demand. Even sunnier inland destinations like Arizona experienced shortages this spring.

“We planned to go to Miami but ended up going to Pensacola via Huntsville,” said another Nashville traveler.

. “It wasn’t worth going down there and paying that much. We called around and there were almost no more cars available, so we just drove down in one day. And it’s just safer that way, I must say.”

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Commuters may face long queues as car hire companies have yet to make new appointments following massive redundancies over the past year.

Another problem facing some airport leasing desks is that many employees who were laid off last summer have not been rehired, despite a dramatic increase in demand. For travelers, this means long queues at airport booths and slower processing times at counters. In fact, rental companies are still watching the market but are wary of increasing car and staff numbers too quickly, fearing another recession this year or next.

The immediate culprit of this state of affairs is the size of the rental fleets themselves. All had tried to reduce up to a third of their fleets last summer and canceled future orders as the pandemic brought the travel industry to a standstill. And now, with the vaccine launch in the US only a few months away, the car rental giants have been unable to fill their fleets fast enough, short of cash since last year and are still on alert from the disruption of the ongoing pandemic related issues.

However, the deeper reasons for the current low availability actually go back to before the pandemic. A number of car rental companies have encountered complex problems during a growing economy, including increased competition among themselves, competition from car service providers and losses in the used car market. Lyft and Uber had chipped away at the traditional rental business model in the second half of the 2010s, prompting some like Enterprise to launch carsharing programs in return, while services like Turo took another bite of the rental giants’ pie.

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A number of companies tried to reduce their fleets in 2018 and 2019 and were finally on the point of stopping travel in the spring of 2020. Hertz entered bankruptcy protection in May 2020, scrapping hundreds of thousands of cars to stay afloat while other rental companies tried the same, canceling up to 80% of their orders with manufacturers of cars by the end of 2020 aggravated by private sellers who also sell their own. cars to make money – but both new and used car sales showed signs of recovery earlier this year.

But those canceled orders mean car rental companies can’t replenish their fleets quickly, especially as automakers shift their priorities in the second half of 2020.

“Although not all car rental orders were cars, the loss of orders from major car rental companies from Hertz to Avis also impacted the first half of last year,” said Stephanie Brinley, principal automotive analyst at IHS Markit. “These canceled orders coincided with production shutdowns, and when production resumed, automakers in some cases shifted planned production from vehicles in the rental fleet to vehicles configured for the retail.”

That means U.S. travelers are likely to experience several more months of rental car shortages in high-demand destinations as the summer travel season picks up steam in -second half of May.

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For now, alternative car rental companies like Turo seem to be making it possible for private owners to rent their cars to travelers. But Turo, too, is facing increased demand in popular destinations as more discover the service.

If there’s a pandemic-friendly way to avoid the high cost of car rentals in popular destinations, it’s to rent locally and then go on vacation. This is because car rental prices have generally not risen above the ground. If air travel is unavoidable, try to find a rental car at least half an hour from the airport and have a car service pick up your car. And if you are planning to travel after the end of the school year, now is not a bad time to start planning your trip, as the shortage could continue well into 2021.

Jay Ramey Jay Ramey grew up around very strange European cars and rather than looking for something reliable and comfortable for his personal use, he was drawn to the more adventurous side of the reliability spectrum. If you have a family vacation planned and are checking the prices of hotels, flights and rental cars, you may be in for sticker shock.

It’s not easy to book a rental car these days, and if you do find availability, the cost is so high that some people are reconsidering their travel plans.

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When they reopened the services, the prices were much lower than usual in many cases because they wanted to attract more customers to keep going.

However, car rental companies faced unique problems during the pandemic, which led to a lack of rental cars in many places. The demand for rental cars is higher, but the supply is low. This, of course, drives up rents.

But why are rental cars so expensive now that people are traveling again? Shouldn’t the price go down as more people rent cars? The persistently high price of renting a car is caused by two main problems.

At the start of the pandemic, idle rental cars became a liability instead of an asset. Some car rental companies have gone out of business altogether, while others have sold their fleets to stay in business.

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Large corporate rental companies with enough cash to see them through the tough months survived, but with much less inventory than before. Car rental companies together sold more than three quarters of a million cars.

Now the car rental companies at the airport have much less cars for rent. Sometimes there are few cars, but travelers don’t want to pay the high prices. Customers waiting to rent a car on a first-come, first-served basis often have no choice but to use a cab, Uber, Lyft, or another form of transportation due to a lack of vehicles.

Although rental companies are expanding their fleets, many are not doing so fast enough or are not carefully managing their reservations and inventory to ensure that customers can always pick up the car they want. have reserved.

Another reason that fleets are not being replenished with cars is the production delays in the car industry which cause problems in the supply chain. Car rental companies simply cannot buy and rent cars that are not available.

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The same problems that keep shelves empty and orders for things like furniture and housewares delayed for weeks or months slow car production.

The pandemic has dramatically increased the need for technology as millions of people have switched to working from home. This has encouraged manufacturers to shift from producing electronics and microchips for cars to those making microchips for computers, tablets and other technologies.

This domino effect caused a shortage of semiconductor microchips, which in turn reduced the production of new cars. After all, factories without microchips cannot build cars that use microchips.

Global chip maker Intel predicts that the shortage will decrease over time but will not disappear entirely until 2023. The CEO of the IMB believes that it can last until 2024.

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Rental companies can renew their fleets gradually until then. But when they realize that there are fewer cars and higher prices

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