As Americans start planning their summer getaways, too many travelers are blissfully oblivious to the apocalypse that awaits them in 2021. They may think they can simply go back to the vacation game plan they relied upon before the pandemic – lock down their flights first, reserve a hotel soon afterward and book a rental car whenever they finally get around to it.
But doing things the old way won’t work this year. Throughout most 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 Supply is Low
The U.S. is now 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.
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. For most of 2020, that wasn’t a problem. Demand was down and the rental companies did not envision a quick recovery on the horizon.
Car Rental Demand is Rising
But now a vastly different picture is emerging. Car rental companies with bare-bones fleets are now struggling to meet the crushing demand from a growing number of folks who suddenly want to travel. That’s leading to skyrocketing car rental rates and, quite frequently, travelers getting shut out of renting any car because they are completely sold out in a given market.
Before you write me off as a Chicken Little who believes the sky is falling on the rental car industry, consider that I am a rental car industry insider. I am the founder and CEO of AutoSlash, a website that has for over a decade helped millions of travelers find the best possible deal on a car rental.
I can tell you that my job has become increasingly difficult in recent weeks given the general lack of availability where our customers are looking to rent cars.
What does a car rental apocalypse look like on the ground? Over President’s Day weekend, we were turning away customers left and right. We simply couldn’t find available vehicles at any price in many locations.
We’re still seeing entire cities sold out of rental cars almost a week out. These are major markets like Orlando, Tampa, Phoenix and Denver. Airport and off-airport. Just gone. Got your vaccinations and want to fly down to San Juan for some sun and surf? I hope you don’t mind cabbing it everywhere. And it is only going to get worse as we head through spring and into summer.
No Short-Term Fix
Perhaps you’re wondering why rental car companies don’t just ramp up capacity to meet the growing demand. Unfortunately, it’s not that simple. Vehicle pricing is relatively high right now and getting new cars in is extremely challenging. Between auto factories shutting down during the pandemic and the widely reported semiconductor shortage disrupting auto factories worldwide, competition for new vehicles is fierce. Keep in mind that the business model in the car rental industry is to buy cheap, rent the cars, and then sell for a small loss within 12 months.
This 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.