Rental car firms face shortage as travel demand revs back up

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Rental cars [Credit: alexfan32/Shutterstock.com]
Car rental companies are struggling to keep up with demand after having sold off inventory during the pandemic. Photo Credit: alexfan32/Shutterstock.com

As summer leisure travel ramps up, travel industry insiders predict the rental car shortage currently gripping the U.S. is likely to worsen before it gets better.

"I potentially see the situation becoming a bigger problem over the next few months," said Chris Brown, executive editor of Auto Rental News. "The country is opening up this summer, and there just aren't many cars to be had in the U.S. market."

According to Brown, groundwork for the rental shortage was first laid in the spring of 2020, when the Covid-19 crisis brought travel -- and consequently, the car rental industry -- to a grinding halt.

"Wheels were not moving," Brown said. "And rental companies don't even have lots to accommodate all their cars, because generally, they expect 70% of them are on the road at any one time. It was just a crazy situation."

In an effort to mitigate their financial free fall, car rental companies began selling off their vehicles, just as American demand for used cars began to climb amid the pandemic.

At the same time, new car production has been hampered by a semiconductor shortage, with semiconductor plants playing catch-up after Covid-19-related manufacturing pauses last year.

Nick Ewen, senior editor of the Points Guy, said the U.S. car rental squeeze first began popping up on his radar in March of this year but has moved "to the forefront" of public consciousness within the last month.

"As vaccination rates increase, people are looking at taking their first trip since the pandemic started 18-plus months ago," Ewen said. "And there's just no way car rental companies are going to be able to get their fleets in order to match the incredible surge in leisure travel demand."

Car rentals have been especially scarce in leisure-heavy destinations, with Ewen citing particularly tight supply and sky-high prices in places like Florida, Hawaii and Denver as well as national park markets.

In Hawaii, the situation is so acute that visitors are renting vehicles from U-Haul.

"There's no doubt that prices are going up," confirmed Marc Kazlauskas, president of Frosch's U.S. branch operations and leisure division. "But my advice to advisors and the general public is if you see availability, just grab it, because you can always cancel."

Steven Gould, CEO of Clearwater, Fla.-based Goulds Travel, has occasionally found it a challenge to adjust client expectations when it comes to pricing.

"I have clients coming here to Florida, and when I brought them down in 2019, their car rental was about $450 for 10 days," said Gould. "Now, for a trip this summer, it's costing them over $1,200 for seven days. The common misconception for most travelers is that because of Covid, there are deals. But the reality is that supply isn't there while demand is increasing."

Gould has also faced car rental-related challenges in Alaska. For a client unable to land a rental booking for an Alaska trip this year, he recently attempted to find creative workarounds, including substituting rail travel for one trip leg and booking a shared tour and private chauffeur for others. Ultimately, that client decided to push back her trip and wait another year.

"Travelers are now second-guessing their plans," said Nate Vallier, president of Juneau-based Alaska & Yukon Tours. "If someone can't get a car, then it changes the dynamic of the trip. People like having that freedom. We thought this would be a great summer for Alaska, but it's actually turning out to be a bit of a challenge."

Vallier also warned of extra-long lines at rental car kiosks. On a recent trip to Hawaii, Vallier encountered a two-hour wait for his rental car in Kona, with "a line wrapped around the building."

"We're advising our customers of this," said Vallier. "We're letting them know, 'Hey, when you get to Hawaii or Vegas, we recommend you leave your family at baggage claim or the Starbucks or McDonald's, while you head to the car rental center and see how bad it is.'"

Signing up for a car rental company's loyalty program ahead of time is another strategy that could help get a renter on a shorter line, one that's dedicated to loyalty members, but when no cars are available, even those with high status may find they're out of luck.

According to the Points Guy's Ewen, the shortage, combined with worry about gas shortages that have impacted regions of the U.S., could lead some Americans to rethink any car rental-related summer travel.

"I think we'll see people considering alternate forms of transportation and alternate types of trips or potentially consider an alternate destination where there isn't a major shortage," said Ewen. "Some people are just not even going to mess with the idea of renting a car." 

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