Car rental will be a pain until at least 2022

On a trip to Disneyland with his kids, John Jimenez of San Jose reserved a compact car at Los Angeles International Airport from Dollar Rent a Car. What he got when he landed was a headache.

Lacking a vehicle, the car rental agency offered him a van, which he said used cigarettes and marijuana instead of a compact car. Jiménez refused the bad van, and after waiting more than two hours he settled for another van with more than 60,000 miles, visible body damage and a “must smell” that lingers on the air-conditioning. came from the system.

“The area where the compact cars were empty,” he said, adding that he demanded a full refund.

A global microchip shortage that has cut production of new cars is dealing a huge blow to car rental companies, but most of the pain is being felt by commuters like Jimenez, who find themselves waiting in long lines. Those who pay almost double the earlier rates. This year, he ended up being deprived of the vehicle he had reserved or riding in a car with too many wear and tear.

According to car rental industry experts, the bad news is that car shortages — and headaches for car renters — won’t subside until 2022 or later.

“The supply of new vehicles is very tight,” said Gregory Scott, a spokesman for American Car Rental Assn.

Due to shortages, car rental companies are keeping their cars before selling and replacing them with new vehicles. Scott and other industry experts said that in the past, rental firms sold their cars when they reached 25,000 to 50,000 miles, but now they are keeping them until they reach about 90,000 miles. Rental companies are also trying to restore their old fleet by buying back used cars that were previously sold at auction to used car dealerships.

Industry insiders say the challenges of filling open jobs have exacerbated the situation, making it difficult for rental companies to work at rental counters and move workers from low-demand locations to high-demand outlets has gone.

As a result, car rental prices hit an average high of $120 a day this summer, compared to around $45 at the start of the year, according to a study by travel booking site The study finds that prices have dropped to around $80 a day and the downward trend continues due to a drop in demand with the end of the summer travel season.

But Steve Sintra, vice president and general manager of North America at the travel website, said travel is expected to pick up again during the coming holiday season.

He added, “The growth in demand around rental cars is something we’ve been seeing all summer, and Kayak’s data is showing that demand isn’t going to slow down anytime soon, especially as we enter the holiday season. Huh.”

Problems for the car rental industry began when the pandemic forced the closure of factories around the world, disrupting production of the microchips needed for electronic devices, laptops and cars. The pandemic also closed ports in Asia, disrupting the Microchip supply chain. Automobile manufacturers canceled chip orders, believing that demand for new cars would dry up during the pandemic.

But once demand for vehicles and electronic equipment for domestic workers returned, chip makers struggled to keep up with new orders. Japanese carmaker Nissan said it plans to make 500,000 fewer vehicles in 2021 due to chip shortages. Other auto makers, such as General Motors, are building vehicles and storing them in huge parking lots by the thousands, waiting for the microchips needed to operate them.

Because of the shortage, the US car rental industry was only able to buy about 800,000 new cars in 2020 to restore its old fleet, less than half of what the industry bought in 2019, Scott said.

Microchip makers say it may take a year or two before supplies begin to meet growing demand. This means the shortage of cars will not subside until 2022 or later, say industry experts.

“There remains a lot of uncertainty,” Will Withington, senior vice president of Enterprise Holdings Inc., said at a recent rental car industry conference in Las Vegas.

In a statement, Enterprise said the company has been able to meet the demand of existing customers by expanding “the normal cycle of our fleet” with stringent safety and maintenance standards.

Industry rival Hertz Corp. said it is “working closely with our automotive partners to add new vehicles to our fleet as quickly as possible, procuring low-mileage, pre-owned vehicles.” and vehicles can be taken to areas of highest demand.”

Such reassurance is little comfort to Kimmy Katz of Titusville, Fla., who described her recent car-rental experience as “very disappointing.”

He rented a Nissan SUV for a two-week business trip to Florida from Dollar Rent a Car. But one of the tires had a slow leak that required him to refill it every couple of days, Katz said. When the tire finally went flat, she said, the car rental agency declined her request for a new car or new tires.

“I’m thanking whatever God or science is that I didn’t break down on I-75 or I-10, where there’s no cell service,” she said.

Asked to respond to problems cited by Jimenez and Katz, Dollar’s parent company Hertz said the company would “need to look at those specific situations to be able to comment further.”

“When customers raise a concern, we look into it and try to fix it,” Hertz said.

Industry experts say that travelers who want to avoid such headaches should book a car at the earliest and try to opt for car rental outlets at small or medium-sized airports, where demand is less. Be.

“I’ve never seen anything like this,” said Eben Peck, executive vice president of advocacy at the American Society of Travel Advisors. “COVID has put a lot of pressure on the system, and this is just one of them.”

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