Last Updated on March 20, 2023 by Jonathan
Bad news, travelers. As Americans plan their 2023 getaways, many are blissfully oblivious to the car rental apocalypse still darkening the travel landscape. Folks may think they can simply go back to the vacation game plan they relied upon before the pandemic. Back then, you could lock down flights first, reserve a hotel and book a rental car whenever you finally got around to it.
But doing things the old way doesn’t work anymore. Through the early months of the pandemic, car rentals were dirt cheap. We’re talking $5 per day in Hawaii cheap. But, alas, those days are long gone.
Car Rental Prices are Still Sky High
A few alarming statistics can illuminate the issue in a snap. Car rental rates in December 2021 were up 50% compared to December 2020 and up 60% compared to December 2019. In short, car rental prices are significantly higher now than they were pre-pandemic and also compared to the first year of the pandemic.
The general expectation was prices would come down in 2022 and 2023. So far, prices are still much higher than they were pre-pandemic.
Car Rental Supply Remains Low
The U.S. is still experiencing a major rental car shortage, so waiting until the last minute to lock down a vehicle means (a) paying through the nose; (b) being priced out of the market; or (c) not even having the option to overpay because every car will be sold out.
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Why is there a rental car shortage when so many Americans are still avoiding travel? While demand for car rental is still down from pre-pandemic levels, more and more people are renting cars as they get vaccinated. Americans also have loads of vacation time squirreled away. But demand is only half of this car rental apocalypse.
What is happening on the supply side of the equation is truly scary. In the early days of the Covid-19 pandemic, rental car companies sold off large portions of their vehicle fleets in an attempt to “right-size” for rock-bottom demand. They sold off as many vehicles as they could, as quickly as they could.
Even then, the rental companies still struggled mightily. The pandemic forced Hertz into bankruptcy. Soon Advantage and E-Z soon followed into Chapter 11. Europcar, the new parent company of Fox, underwent major financial restructuring to survive. The net effect was fewer rental car companies with bare-bones fleets.
While rental car companies have been rebuilding their fleets, they are faced with higher prices for new vehicles. So they are trying to “right-size” and find that Goldilocks number of just the right number of cars to operate efficiently. As a result, in practical terms there remains a slight supply shortage.
How to Land the Lowest Price
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This year, like last year, the cost of your rental car may end up being the most expensive component of your trip – and that’s if you are able to snag one at all. The problem is going to be especially acute for travelers who want or need larger vehicles like minivans, full-size passenger vans and full-size SUVs. These tend to sell out most quickly and may already be gone even when booking weeks ahead of time.
How to escape the car rental apocalypse? To avoid overpaying for a rental car and ensure that you snag a vehicle, you will need to book a car rental as far ahead as possible. Folks who book their flight and hotel but figure they’ll worry about their car rental last will do so at their peril.