As you might have noticed, or heard from us, rental agencies have been hoovering up new and used vehicles to offset the 2020 selloff that stemmed from everyone mysteriously cancelling their travel plans that year. Returning to normal, which is something anyone who didn’t assume the world was ending could have predicted, has resulted in increased pricing for vehicles — regardless of whether you’re renting or buying.
Rental companies typical try to play the vehicle market like the rest of use stocks or (if you’re hip) crypto. Buy low, sell high. But 2021 has created a perfect storm of increased demand coming after a long stretch of nothing and an auto industry that doesn’t seem to be capable of building cars thanks to all sorts of component shortages. But it’s no sweat for the big rental agencies because they’re now able to charge just about whatever they want. They’re keeping vehicles in their fleets longer, making more money off them, and selling them back at elevated prices.
Your author frequently relies on rental cars to avoid putting additional miles on his security blanket/gas guzzler and it worked a treat when firms were charging double-digit prices for a car that was ultimately going see another 800 extra miles placed on the odometer in a 24-hour period. But the current reality is a glut of high-millage cars in less-than-ideal condition that may not even be on the lot when you arrive at the rental desk.
What can be done? Well, reserving a vehicle well in advance of your trip is never a bad. But shopping around will likely be more helpful. You might find certain agencies with terms that work for milling around town but become prohibitively expensive if you plan on taking them out of state. Depending on where you’re going, the inverse might be true. We recommend comparing all the big-name firms and then considering something like ZipCar or peer-to-peer car sharing apps like Turo or GetAround at your final destination. Some drivers in areas were rental vehicles are in short supply that have even found themselves avoiding plump fees by just renting smaller trucks from U-Haul. Just be sure to keep the number of miles you’ll be covering in the front of your mind so you can do the math.
Renting away from airports can also save you money, as they typically yield lower rates. You’re likewise more likely to have a vehicle waiting for you if you’re part of a loyalty program or book something that’s a little nicer than the Manager’s Special. They’re typically more willing to cut you a sweeter deal if something goes wrong, too.
But there’s little that can be done about the core issues that are creating the problem.
According to Cox Automotive, via Automotive News, the typically mileage for rental risk units was 82,800 miles in April. That represents a 62 percent increase from the same time in 2020. Meanwhile, the average price for agency owned vehicles sold at auction was up 32 percent in April compared with the same time a year earlier and up 7 percent from the previous month. This trend is all but guaranteed to continue throughout the summer.
Hertz, which almost died last year, is currently reporting its inventory is below 300,000. That’s down 42 compared to 2019, with most other agencies noting similar (though usually smaller) sizing disparities between their pre and post-pandemic fleets. Don’t forget, demand for rental vehicles dropped by around 90 percent in the first month of the pandemic and those same companies were worried they might not survive to enjoy 2021.
When will things begin to stabilize? Probably when demand drops and it becomes less lucrative for agencies to keep hoarding cars and renting at such high prices. But that doesn’t just mean when the vacationing months are over. Rental groups want to recoup last year’s losses and the automotive industry will also need to figure out its supply chain issues to help match the rising demand.