Here's Why Rental Cars Are So Expensive

A man answers the phone to my Nashville neighborhood’s Enterprise Rent-a-Car, but before I can ask about his firm’s car inventory, he puts me on hold. Certainly, I say to the muzak. And so, as I wait, I continue to read the Washington Post story on the national shortage of rental vehicles, which was published April 8 and predicts the problem to only grow worse over the coming summer. Rates have doubled compared to those pre-, early- and mid-pandemic days, sometimes surpassing the cost of the airfare to one’s destination. I continue to hold and read.

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For such a straightforward problem of too few cars, trucks, and SUVs, there are a surprisingly large number of factors, all of which are conspiring to jack up your rental rate in Florida, Texas, California, Arizona, Hawaii, and the territory of Puerto Rico, among others. One is that more people than ever, sporting their shiny new vaccines, are taking to the skies for a long-overdue vacation. Another is that rental car companies, responding to a dearth of travel in 2020 due to a global pandemic, cut their fleets to the bone. (Paradoxically, this is also contributing to the current spike in used car prices, as these traditionally trickled-out fleet vehicles often end up in your local lemon lot, and without a steady stream, second-hand supply has also felt the pinch.) And then there’s a global shortage of semiconductors, which new cars need but manufacturers are struggling to source.

“Essentially this is really just kind of an extreme example of supply and demand,” Chris Woronka, a leisure analyst at Deutsche Bank, told the Post.

A woman picks up the line at my Nashville Enterprise, and I ask her my question: I’m planning on renting a car soon (probably true), and I’ve been reading about a national rental car shortage. Is my local neighborhood rental agency experiencing the pinch?

“Definitely,” she says, adding that they’ve been feeling the trend’s “backlash” over the past few months.

Backlash? I ask.

“Consequence,” she says, rephrasing with a less crisis-oriented word. She sounds tired.

In the Post story, official Enterprise Holdings spokesperson Lisa Martini said the company is working with manufacturers to source more vehicles and meet the demand. (The paper also reached out to Hertz Corp. and Avis Budget Group, but the companies did not respond for comment, which to me sounds like they placed the Post reporter on hold.) “We also are leveraging our large network of neighborhood and airport locations to move vehicles where possible to support regional spikes in demand,” Martini added.

When I pose this question to my local neighborhood rep — “Is Nashville International Airport, which this time of the year is thick with Ohio bachelorette parties coming into town, conscripting your vehicles?” — she says that so far, no. But the bachelorettes, in their bloodlust for a Toyota Matrix, had discovered neighborhood locations anyway and were now pillaging their stocks, achieving the same result. These are lean times, she continues, and if I want to rent something, I’d better do it early and soon.

Far from a short-term problem, experts are predicting this famine to continue through the peak of most Americans’ preferred vacations.

“I am not overly optimistic that we are going to have all the rental cars we need for peak summer travel season,” Woronka, from Deutsche Bank, told the Post.

So what does that mean for you? Well, if you were one of those guys who participated in the equivalent of an old-fashioned bank rush on your local supermarket’s toilet paper supply last year, you know what to do.

Without a splash of foresight, the Post suggested that future travelers create multiple bookings, canceling the ones they didn’t need at the last minute, provided there is no financial penalty. (Often rental companies, including Enterprise, do not charge a cancellation fee to members when reservations are booked through the company itself, rather than a third-party website.) The downside, obvious even to this English major, is that travelers will be parked on multiple reservations like they were Beyoncé tickets. The current system, already overburdened with a lack of supply, will come under even greater demand as travelers’ multiple reservations clog things up, exacerbating the root problem and further spiking prices.

With 18 months of pent-up cabin fever clogging the airports and roads this summer, there is unfortunately no white knight coming to the rescue. Rather than flying, should you road trip to your destination? Maybe. Uber White at your location? Probably. But the last thing we’ll advise is to stay home. You’ve hunkered down, gotten your shots, and survived a global pandemic. Now it’s time to travel. After all, after the last year, spending a few more bucks (and a few more minutes on hold with the rental agency) is a much easier burden to bear.

Here’s Why Rental Cars Are So Expensive

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