A 'perfect storm' is causing massive rental-car shortages, and prices are skyrocketing up to $700 a day in popular destinations
- A "perfect storm" has created a rental-car shortage across the US, an expert said.
- Prices have risen to $700 per day in some markets, becoming more expensive than airfare and hotels.
- If you want to avoid these high prices, plan ahead.
A rental-car shortage is pummeling the US and may only get worse as
Vaccinations and easing travel restrictions have been pushing more people to travel again. Airline 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 warm destination, you might want to check the local car-rental prices before you book any flights or rooms.
Hot tourist locations in Hawaii, Florida, Phoenix, Arizona, and Puerto Rico are being hit by what some are calling a "car-rental apocalypse."
Two or three years ago, the average car rental in Hawaii cost about $50 a day. Now some rental cars are going for over $500 a day, Jonathan Weinberg, the founder and CEO of AutoSlash, told Insider. In extreme cases, prices have risen to $700 a day, more than doubling 2019's numbers, Chris Woronka, a senior hotel-and-leisure analyst at Deutsche Bank, told Insider.
Procrastinators looking to book a
"People are quickly realizing that they need to take the cost of the rental car into account, because it's no longer just an add-on," Weinberg said. "It literally could be the majority cost of your trip, so folks who are planning things last minute are unpleasantly surprised by it."
What the car-rental companies are saying
The car-rental company
Hosts with Turo, a car-sharing company, have also seen a surge in demand as traditional vehicle-rental companies have become too expensive, Andre Haddad, Turo's CEO, said in an emailed statement.
"2021 has definitely been a huge turnaround for the car-sharing industry in Orlando," Anthony Paulino, a Turo host in Orlando, Florida, said in an emailed statement. Paulino is seeing bookings as far into the future as November, he said, adding, "Half of my guests have told me they will never return to another traditional rental company again."
How a 'perfect storm' created the shortage
This rental-car shortage can be linked to several factors, creating what Woronka called "a perfect storm."
When the COVID-19 pandemic halted travel around the US, car-rental companies like Hertz - which filed for Chapter 11 bankruptcy protection in 2020 - and Avis had to sell off chunks of their fleets to save money. But that move has become an issue as people scramble to book vacations in warm destinations after a year of no travel.
To resolve this problem, companies like Enterprise have been shuffling vehicles from less popular locations to more frequented hot spots. While this could alleviate the immediate shortage issues, locations that had cars removed could have limited availability in the future as well, creating a "balancing act" issue, Woronka said.
Weinberg hypothesized that this reshuffling could also be why rental cars are selling out or selling for very high rates in markets like Charlotte, North Carolina; Charleston, South Carolina; and Montana's Glacier Park International Airport.
"You start to wonder why those areas, and the only real logical explanation is that they're pulling vehicles out of there and they're leaving those areas with a short supply," Weinberg said. "No matter how much shuffling the rental-car companies do with the vehicles that they have on hand, I just don't think it's going to be enough."
As for the companies buying new cars, it's not that simple. A computer-chip shortage has begun to harm the auto industry, making it more difficult and expensive for these companies to acquire new vehicles.
This chip shortage is the "No. 1 issue," Woronka said, preventing these companies from quickly restocking their fleets because of skyrocketing used-car prices and a decreasing number of new cars.
"It's like everybody going to the fire exit at once in a movie theater," Woronka said. "It's an unusually broad and quick surge in demand that's being exacerbated by this shortage of new-car availability."
As a result, these car-rental companies are likely to hold on to their existing vehicles for longer than usual. Rental vehicles with over 60,000 miles - once rare - could become typical in the coming months.
There could be a light at the end of the tunnel for car-rental companies in a few months. Demand for rental cars often slows down in September, which could give these companies some "breathing 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 you would a flight, considering planning your vacation further ahead of time.
- A 24-year-old stock trader who made over $8 million in 2 years shares the 4 indicators he uses as his guides to buy and sell
- My fiancé and I picked out my engagement ring together before he proposed, and I don't regret missing out on the surprise
- Financial inclusion made easy for India’s small merchants with Paytm’s pioneering QR codes and Soundbox
- 10 Must-Do activities on your next Darjeeling Trip
- Govt received ₹1,70,501 crore in April as revenue
- Shubman Gill, Sunil Narine, Virat Kohli & more: IPL man of the series winners since 2008
- Five personal finance deadlines you can’t afford to miss in June
- List of famous things to buy in Darjeeling