Press "Enter" to skip to content

$300 a day for a Kia Rio. Why rental vehicles costs have gone insane

A yr in the past, air journey got here to a close to halt, resulting in a glut of rental vehicles. Rental corporations parked their vehicles in unused heaps at ballparks across the nation, and vehicles had been rented for a fraction of their regular worth — or offered as used vehicles. The business offered off greater than a half 1,000,000 vehicles, a couple of third of their mixed fleets, simply to generate money they wanted to outlive the disaster.
Last weekend in Florida, 18 of the state’s 20 largest airports had been completely out of vehicles, in response to Jonathan Weinberg, the CEO of AutoSlash, a website that helps automobile renters discover the bottom worth. He stated vehicles had been additionally offered out on the airport in Phoenix and far of Hawaii. He expects the identical to be the case this coming weekend, and most upcoming weekends into the summer time for individuals who wait to order a automobile.

“We’re looking at rates of $500 a day in some places,” he stated. “Last spring we were seeing $5 a day rentals in Hawaii. You’d never seen that. Now you’d kill for a car for $300 a day.”

A search of automobile rental websites Wednesday confirmed a Kia Rio, a sub-compact automobile, going for $300 a day in Orlando, subsequent week. On Maui, Hawaii, the one rental accessible subsequent week is a Yukon for $500 a day.

The scarcity is pronounced in trip locations. It’s nonetheless attainable to seek out vehicles elsewhere, comparable to Omaha, for about $300 per week, fairly than a day.

“Rental car supply is normally tight around spring break, but not like this,” stated Chris Woronka, analyst at Deutsche Bank who follows the business. “Normally you have 30% more cars.”

He predicted a lot of spikes in journey costs above 2019 ranges as vacationers begin to return, particularly for individuals who do not guide upfront. The suppliers — airways, accommodations or automobile rental corporations — do not wish to convey capability again too quick solely to see journey fall off once more.

“I do think you’re going to have this period of readjustment,” he stated. “During this period of pent-up demand for travel but not enough supply, you should expect prices would be higher than in the past. The travel providers are testing the waters. We’re in uncharted territory. They’ve all lost a lot money in the last year.”

While airways grounded planes and accommodations have closed some flooring or quickly shut in some instances in 2020, it was simpler to convey that capability again on-line with rebound in journey.

“Rental cars are an extreme example,” Woronka stated.

Book means forward

Car rental corporations declined to remark instantly on the costs or their provide of autos, however they confirmed that the scenario is extraordinarily tight, and suggest that prospects guide effectively upfront of their journey.

“There are challenges in new vehicle supply, due in part to the recent global chip shortage impacting new vehicle availability,” stated Sara Miller, spokesperson for Enterprise Holdings, which incorporates the Enterprise, Alamo and National automobile rental manufacturers. “We are working closely with our partners to continue to add vehicles to our fleet … [and moving] vehicles where possible to support regional spikes in demand.”

Hertz, which is within the means of making an attempt to win courtroom approval to emerge from chapter, additionally consists of Dollar and Thrifty rental automobile manufacturers. It offered greater than 200,000 of its US fleet final yr, about 42% of its provide, leaving it with simply lower than 300,000 US vehicles within the fourth quarter. Rival Avis Budget (CAR) offered 25% of its fleet. Privately held Enterprise doesn’t report outcomes.

“We’re seeing a surge in demand for leisure travel in vacation destinations across the industry, particularly around peak travel times like spring break. Given where the industry was during this time a year ago, we’re happy to help travelers return to the road safely,” stated Lauren Luster, spokesperson for Hertz. “Because of the spike in demand and tighter fleets across the car rental industry, availability may be more limited.”

The rental automobile corporations have began shopping for vehicles once more, however after losses final yr and air journey nonetheless solely about half of what it was in 2019, these purchases are at a slower tempo than pre-pandemic ranges. Purchases of recent vehicles by the rental corporations had been down greater than 90% in May and June as final yr. They’ve now bought practically 400,000 vehicles within the final 5 months, however down about 40% from its yr earlier purchases, in response to information from Cox Automotive.

“The car rental companies would rather not have enough supply and see some higher prices than become overfleet again because they overestimated the rebound,” stated Woronka.

Be First to Comment

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    %d bloggers like this: