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What’s Going on with Rental Cars Right Now?

Travelers Today       By    David Thompson

Updated: Feb 03, 2022 01:14 PM EST

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What’s Going on with Rental Cars Right Now?

(Photo: Pixabay via Pexels)

If you've tried to rent a car in the past year, you've probably asked yourself what is going on. 

In the past, the biggest concerns with renting a car were typically deciding whether or not you needed the additional insurance from the car company in case you got in an accident and where you'd fill it up before returning it. 

It's a different world out there for rental cars now. 

They are incredibly expensive, and they're also in short supply. If you're lucky enough to find a vehicle, you're going to pay a premium. So, what's going on and what can you do if you have a trip coming up and you'll need a car?

Rental Car Price Spikes

If you're going to go on a weekend road trip, you might find that a rental car will cost you an eye-watering amount. Even for a short trip, people are getting quotes of $1,000 or more. You could get a couple of flights for the price of a rental car. 

Last year, The Washington Post did a story about it, calling it the "car rental apocalypse."

Their story focused on the long lines, canceled reservations, and soaring prices car renters were facing on their travels. 

So what's happened?

Rental car companies are actually facing several factors converging with one another. When pandemic lockdowns, people didn't travel. Then, as a result, rental car companies saw a big decline in demand. Car companies went into survival mode. Many decided they were going to sell off their vehicles as part of just trying to survive. 

Companies got rid of hundreds of thousands of cars, which made sense for them at the time based on the demand. 

Then, things changed again quickly. By the summer of 2020, people in many states were traveling again. 

Theoretically, under different circumstances, car companies could have started once again buying new vehicles. Unfortunately, that's not so easy right now because we're in the midst of a global chip shortage. 

Chips are used to make car parts, so there are fewer new cars leaving manufacturing facilities. 

Used cars are incredibly expensive right now, and a lot of people are holding onto their cars for longer than they would normally because they don't know if they'll be able to find another one. 

By the summer of 2021, rental car prices were up 70% compared to 2019. 

There was a third issue impacting car companies, too, as if they needed another one. 

A lot of people prefer and still do want to travel by car if they can, because there are regulations on airlines, and they might not want to be that close to other people right now. 

When Will Prices Go Down? 

A lot of people are wondering when the pain of renting a rental car will subside, and there's no definite answer. 

The chip shortage is likely going to last through this year, so that's going to keep impeding enough cars from entering the market for the demand. 

Just Ford says it's going to get 1.1 million fewer cars out of their facilities this year. 

Rental car companies are trying to buy cars back they sold at auctions, and they're holding onto cars for much longer than they would normally have. 

The short answer about when prices will go down is probably not anytime soon, so what can you do?

Where Is It Most Expensive to Rent a Car?

While there are frequent fluctuations depending on season and some of the travel patterns, Alaska and Hawaii have recently had some of the highest car rental rates. 

For example, Anchorage, Kona, and Honolulu have some of the highest rates in the country. Portland and Seattle also top the list. 

Saving Money On a Rental Car

There's not much you can do about the larger issues affecting car rental businesses, but there are some things you can do on an individual basis if you have a trip coming up. 

First, rent as soon as possible. If you have a trip coming up, and you've made plans for it, book your rental car now if you can. 

Rental car companies use dynamic pricing, which they base on supply and demand, in their rate determinations. If you rent it as far in advance as you can, then you know you'll have a car, or at least you should. You can keep watching the rates, and if they go down, you can ask for the lower rate you see advertised. 

Booking early is especially important if you need a big car. Larger vehicles like full-size SUVs and minivans tend to sell out fastest because these are what people tend to want when they're traveling. 

Other ways to save money include:

  • Don't rent at the airport. While it's convenient to rent at the airport you're flying into, you're going to pay for that convenience, and you'll probably also have to deal with long lines and a lack of customer service. Usually, car rental companies include an airport surcharge in their prices. The surcharges might be listed on an itemized breakdown as a Customer Facility Charge. It could also be listed as a percentage of your overall rental. Many rental car companies will offer shuttles to locations that are near the airport but not onsite. 

  • Use car rental comparison sites. They really are one of the best ways to find a good deal. You can compare all your options in terms of both vehicle type and rental companies. 

  • Book a refundable rental so that if you come across a better deal, you can cancel it. 

  • If you pay ahead of time, you might get a better price than opting to pay at the counter. 

  • There are good discount brand companies outside of Budget, Hertz, and Enterprise to consider. For example, Dollar Rental and Thrifty tend to have cheaper car options

Finally, if you have certain memberships, like AAA or a Costco membership, you may be able to save money when you rent a car if you use those. 

See Now: The U.S. had the highest number of Most Wanted properties, dominating the Hotels.com Loved By Guests Awards 2018

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