Rental car prices skyrocket as pandemic causes supply shortages

PHILADELPHIA – As the economy restarts, distractions are spreading across industries and across the region. One such business is the car rental market, with prices skyrocketing as car supplies decline.

Maureen Curry wanted to rent a seven-passenger minivan or SUV for her son’s Marine Corps initiation trip to Quantico, Virginia, in July.

She’s a Car Rental: The 55-year-old Downingtown woman and her husband, Rick, have rented vehicles more than a half-dozen times a year over the past eight years, as their two older children went to colleges and on set. Up apartments, saving wear and tear on your own vehicles.

But this time, Curry said, none of the major rental companies had any vehicles available for travel. And she had been shopping since two months ago.

“I’ve never, ever, made a reservation for a vehicle two days in advance, and never had difficulty getting a vehicle before this incident,” Curry said.

It’s no secret that rental cars have been difficult to obtain in some places, and very expensive in many others.

According to AAA’s Leisure Travel Index, the average daily car rental rate has nearly doubled from $89 a day on Independence Day 2020 to $166 during the same time period in 2021. But some destinations are taking a beating, with daily prices reportedly ranging from $250 to over $250. $600 or more at some airports across the country.

Sue Spinney, vice president of ground transport with Expedia Group, said in an email that searches for rental cars showed more than double interest, jumping 115% from June 2019 to June 2021.

Rental car shortages gained a national audience after singer-actor Audra McDonald, most recently known for her role as Liz Reddick in the legal drama The Good Fight, discovered that Hertz had an apartment in Atlanta. No car, he tweeted. : “The Lieutenant Hunger Games are here.”

Jessica Caldwell, an analyst at the automotive industry go-to site Edmunds, explains the tsunami of bad events in the rental car industry.

First came the pandemic, and the country went into lockdown. Because the rental-car business involves vacationers and business travelers, rental car companies faced a cash-flow cliff once those industries dried up.

In some cases executives had to sell unused vehicles as part of a bankruptcy reorganization.

This business decision seemed wise at the time. Hertz, which also owns Thrifty and Dollar brands, reported that between April and June of last year, its US car usage was up 28%, versus 82% during the same period in 2019. The 2020 decline came despite shrinking its rental fleet. Around 50,000 cars compared to its 554,794 vehicles last year. So, obviously, some of these cars had to go.

And so they did — a 40% reduction in a year, according to Hertz, from 516,726 vehicles in the US at the end of 2019 to 298,183 at the end of 2020. According to Hertz, the company achieved a utilization rate of about 75% by the end of 2019 and the end of 2020.

But, Caldwell continued, the trouble didn’t stop there. In 2021, the spread of vaccinations has Americans eager to get back on the road, and there has been a surge in demand for rental cars. At the same time, consumer demand to buy vehicles also skyrocketed, as people were wary of mass transit in the pandemic. Car sales, after faltering in spring 2020, went through the roof by the end of the year – and remained there.

And finally came the lack of computer chips. The cars could not be finished due to a lack of computer chips, and with the shortage, automakers were not interested in the fleet business.

“In terms of automakers looking to sell cars, their first priority is the retail consumer, or people like you and me, and secondly their fleet customers,” Caldwell said. “I think rental cars are at the bottom of that list; they generally have the lowest margin in terms of their mileage.”

Caldwell shared the experience of a colleague in Edmonds who had just returned from a trip to his home state of Hawaii.

It became impossible to find a three-row SUV for five nights in the Aloha State, said Talia James-Armond, Edmunds’ associate director of public relations and communications. His party settled for a Dodge Grand Caravan, but it came at a cost.

Five days with the car cost $2,100, James-Armond said, or $400 a day, compared to about $90 when she took a trip to the Big Island in 2018.

“Finding accommodation was not a problem, but finding a rental car was a nightmare,” James-Armond said.

A new wrinkle that could reshape the rental car market is the coronavirus delta variant, and new masking and travel advice from the Centers for Disease Control and Prevention. Jan Tidwell, AAA MidAtlantic Manager of Public and Government Affairs, said AAA always insists that travelers follow CDC guidance if they decide to leave the city.

“It feels like we’re having a very different conversation about travel today than we were having just two or three weeks ago,” Tidwell said.

According to AAA data, after the summer season, when travel demand was down just 2% overall from 2019, she expects demand to decline after Labor Day. Tidwell said leisure travel hasn’t improved the way business travel has done.

Kelly Laverty of West Chester wanted to explore Glacier National Park in Montana for a week and needed an eight-passenger vehicle for a week-long trip in late August.

“It was really impossible to find the car,” said Laverti, 43. She was particularly concerned that she would reserve the larger vehicle she needed for her family, only to be stuck with a sedan.

She learned about Turo, the online car-sharing marketplace, which is like Airbnb but for cars. There, car owners offer their personal vehicles to people who rent them. Laverty was able to find a Ford Expedition in time for the trip, even canceling a minivan that was reserved via Turo that would have become a real squeeze.

Various reports found some passengers renting U-Hauls or Home Depot pickups. And it has even had a trickle-down effect.

Curry from Downingtown tells how her 24-year-old daughter Anna Curry recently moved from Visahikon to Manyunk. He hired a U-Haul as he had done many times before. But this time little Curry got a shock.

“He paid more, and he had to go further to get the vehicle,” Curry said.

And, like traveling itself, going into the unknown for a rental car – like on Turo – can do the opposite.

Laverty and her husband, Nate, 43, also embarked on an unusual adventure during their trip. The group spent the afternoon at a waterfall where people could dive.

Nate and a friend saw another park patron jump into 50-degree water, but not on the surface. He waited and finally decided to jump to the rescue. They manage to save the man, but in a quandary, Nate Laverty forgets his pocket key to the expedition key the group had hired on Turo. When they returned to the vehicle, the slimy fob did not start the car.

The owners told Lavertys that they would take a trip to the park, pick up the car with a spare key, and pick them up when the group of vacationers drove an hour and a half to cell service, and explained over the phone that they needed the next day. car.

Kelly Laverti said helping car owners rent through Turo was an unexpected benefit. “I think personal communication and the kindness of strangers help us make the most of what is essentially a bad experience,” she said.

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