Rental Car Shortage Causes Rates to Skyrocket
Tips on how to book a car without breaking the bank
En español | It used to be that reserving a rental car was an afterthought, the last thing a traveler did before taking a trip.
This year, it's best to make it the first.
In recent weeks, travelers have reported rates topping $500 a day in hot spots like Hawaii and Puerto Rico. Prices are also high — and car availability limited — across Florida and in Alaska, where Anchorage airport agencies are sold out for the summer.
A recent study by CheapCarRental.net found rental car rates across the U.S. averaging about 30 percent higher than last May, while in Hawaii and Florida they're up by more than 50 percent.
And the problem will likely get worse.
Travel experts and rental companies say several factors are fueling the surge, all related to the pandemic.
In recent months, vaccinations have sparked a travel boom as more people take to the skies to visit friends and families, and plan vacations.
But this comes at a time that rental fleets have shrunk. When demand dropped last year during the pandemic, companies sold off a large proportion of their rental fleets to raise cash. Auto dealers and sales centers gladly snapped up those offerings due to a shortage of used cars. That leaves rental companies scrambling to find vehicles to ramp up supply, says Lauren Fix, editor in chief of Car Coach Reports.
A shortage of semiconductor chips used in high-tech automotive systems, as well as a scarcity of rubber and steel, has slowed auto plants and the production of new cars. “Fleet sales are last in line, so it has been difficult to quickly ramp up fleets to match demand,” says Mark Mannell, CEO of CarRentalSavers.com.
Like many firms, Enterprise Holdings, which runs Alamo, Enterprise and National, says it's finding it hard to acquire new cars due to the semiconductor chip shortage.
"We continue to work closely with our manufacturing partners to secure additional vehicles,” the company said in a statement. “If you're planning travel, we encourage you to reserve a vehicle as early as possible. Providing flexible travel dates and branch pickup locations in your search may also help increase your options."
Jonathan Weinberg, CEO of AutoSlash.com, was one of the first to identify the problem back in February, when he warned of a coming “car rental apocalypse.” He expects it to get worse in the coming months, citing Montana — expected to be a hugely popular destination this summer — as an example.
Car rental agencies at the airport serving Glacier National Park in Kalispell, Montana, are completely sold out for the summer, he says. And the problem has spilled over to airports more than 100 miles away, in places like Missoula and Bozeman, as travelers look for other rental options across the region. The same thing is happening in Alaska.
Due to that demand, prices are soaring.
"Prices are at the highest levels I have seen in my 15 years of tracking rental rates,” Weinberg says.
Prices currently range from about $100 per day for Memorial Day weekend in Florida to up to $609 a day in Puerto Rico, he says.
But not all areas of the country have a problem. Availability differs market to market, and week to week. For example, cars are inexpensive and readily available this spring in places like El Paso, Texas; Sacramento, California; and Rochester, New York.
Still, experts expect the shortage to continue for most of the year in places catering to vacationers.
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"Unfortunately, there is no quick fix, and with vaccination rates expanding, we'll likely see even more demand for travel over the summer and even higher prices,” says Nick Ewen, senior editor of The Points Guy, a travel advice website. “I would expect this to last through the summer and into the early fall at least.”
Tips for finding an affordable car rental
- Reserve a car rental before booking a flight, and consider shifting travel dates based on car availability.
- Make a reservation as soon as possible. Rates will likely rise the closer you get to the travel date.
- Check prices at non-airport rental agencies. Even if it requires a long taxi or Uber ride to get to your car, you can still reap considerable savings.
- Always book pay-later rates (no credit card required) so you can cancel and rebook if a better deal comes along. Use AutoSlash.com, which automatically checks discount codes and numerous travel websites, to find the best deal. And always try discount codes, including AARP and corporate codes, and any others you may have through frequent flier memberships.
- Consider booking for a longer rental period and then returning your car early, because longer rentals usual carry a lower per-day fee. In many cases, the company will prorate your rental if you return it early. But read the fine print: Some agencies will revert to a more expensive daily rate if you change your reservation.
- Sign up for the major car rental companies’ loyalty programs. They're free to join and will let you skip the counter — and the long lines — at airport locations.
- Get creative. Travelers have resorted to renting a U-Haul instead of a passenger vehicle for their vacation. While it may not be as flashy as a convertible, the cost can be considerably lower.
- Consider Turo.com, which arranges car sharing for individuals, much like an Airbnb for cars.
- Rethink your plans. It may be cheaper to book rides on Lyft or Uber to get around your destination instead of renting a car.