Learn how supply chain problems are causing rental car prices to soar and discover creative car rental alternatives
Planning a trip can take a lot of, well, planning. You have to pick a destination, find a hotel, book airfare, and in many cases, rent a car. However, in previous years, renting a car wasn't likely to take up much of your time - or your money. But unfortunately, rental car prices and availability are more examples of the seemingly endless supply chain problems the world has been experiencing recently.
So what is the cause of this recent spike in car rental costs? Why are car rental agencies having such a hard time with availability? As with most economic issues, supply and demand play a large role in rental car price fluctuations and the recent pandemic has contributed to problems with both.
That's why today, we'll talk about why rental car prices are so high and discuss which car rental alternatives you may want to consider - read on!
How much is a rental car?
Car rental prices depend on a variety of factors
, such as the location, type of car, reservation length, and any added features you may pick up at the counter.
In the past, it wasn't uncommon for you to be able to rent a modest sedan for $30 or $40 a day, depending on some of the aforementioned variables. Of course, you could pay more if you decided to rent a more expensive luxury vehicle, but the standard options were often very affordable.
Recently, however, the cost of renting a car has gone up considerably. For something like a standard five-seat sedan, you could pay as much as $100 a day or more
if you can find one. Rental car prices began to increase in 2020 but by 2021, they have doubled in many cases.
But the cost isn't the only problem you may face if you're looking to rent a car in the foreseeable future - you will likely have problems finding one in the first place.
Why are rental car prices going up?
No matter when or where you're going, it seems clear that rental car costs will be an unfortunate issue that many travelers will have to deal with over the coming weeks, months, and possibly years. But that wasn't always the case, so let's take a look at some of the underlying causes behind the rental care price increase.
The rental car shortage
During the early days of the pandemic, it became clear that much of the country would be closing down in some capacity. Businesses closed their doors and people went inside and it wasn't clear just how long that would last. Rental car companies saw the writing on the wall and realized that the demand for their services would plummet in the months to come.
In order to stay in business, many car rental companies had to quickly sell off much of their inventory. With the demand dropping, the cost of maintaining large fleets of cars that no one would rent would have tanked these companies, so they sold as much as they could and hoped for things to turn around.
Fast forward to the middle of 2021 - much of the country began opening back up and people were looking to travel again. Many Americans hadn't had a vacation in over a year and they were ready to get back out on the road, so the demand for rental cars exploded - much sooner than rental car companies anticipated. Of course, the rental car companies didn't have the inventory to meet that demand, but worse still, they would find that there was no good way to build that inventory back up.
This brings us to the "supply" part of the problem. Like many consumer electronics, cars and the components necessary to build them were and still are in short supply, primarily because of a global computer chip shortage
. Unfortunately, most of the world's electronics rely on the semiconductor industry and supply chain, which is struggling to meet the massive demand.
To summarize, rental car companies sold much of their inventory in the beginning of the pandemic as demand fell. This left them unprepared in 2021 as demand began to inflate faster than they anticipated. Because of global supply chain issues in the semiconductor industry, new vehicles are in short supply and car rental companies are struggling to restock their inventory.
As a result, customers are seeing huge spikes in rental car prices and availability.
What to do if rental cars are sold out: Shortage solutions and rental car alternatives
As many places open back up, and the prospect of getting back out of the house for a much-needed vacation
becomes more alluring, it would be a shame to have something like rental car prices or shortages get in the way. At the same time, the idea of spending most of your vacation budget on a car rental isn't appealing, either. Fortunately, there are a number of different methods you can use to either find a better car rental or get around your destination without one.
Adjust your itinerary
Let's say that you're planning a trip to a popular destination, like Los Angeles. Most of the time, you would fly into LAX and rent a car in LA. But popular destinations are likely to have fewer rental cars available and those that they do have will likely be more expensive because of the demand.
However, if you don't mind a little extra drive, you could adjust your route and fly into a different airport, like Ontario International Airport which is just over an hour away from LA. This is just an example, of course, but adjusting your itinerary may offer better rental car prices and availability and may even get you a cheaper flight.
Adjust reservation timing
If you have the ability to be flexible with the dates of your vacation, you might be able to find an off-time where more cars are available and the rates might be better. For example, if you're trying to plan a trip for Thanksgiving, the rates and availability on and around those dates might be lacking because everyone else is trying to get a rental car, too. If you can expand your vacation, or shift it by a few days, you might find that more rentals are available.
Book your car rental first
In the past, booking a car rental might be one of the last things you do when planning a vacation; you'd book a flight, book a hotel, and then look to see what rental cars where available. However, with sky-high rental car prices and inventory shortages, you might consider doing things the other way around. Otherwise, you might book your flight and hotel only to find you won't have a way to get around when you arrive at your destination. You'd then have to reschedule your flight if possible, and that often comes with fees.
To ensure that you have a car rental for your vacation, and to try and get it at the best price possible, book your rental first, then build the rest of your vacation around it. If after scheduling a rental car you can't seem to find a flight or hotel, cancelling a car rental is usually no big deal.
Avoid airport rentals
If you're a frequent traveler, you probably know that many rental car agencies have locations at the airport itself. While this is convenient, it is also one of the more popular places to rent, which means they're probably going to have fewer cars available and those that they do have will likely be more expensive. If you're planning a trip, consider looking at car rental prices and availability outside the airport locations.
Wouldn't it be nice if you could just borrow someone's car for the weekend? Good news - you can! Car sharing apps like Turo
allow car owners to rent out their vehicles when they aren't in use, similar to the way Airbnb
works with lodging.
While this can be a great alternative to car rentals, it usually isn't as simple to set up. Many apps, including Turo, require extensive background checks and proof of auto insurance
before they'll give you the keys. You may also have to find transportation to the home of the owner, or wherever the car is being stored, which can be an issue if you're already without transportation.
That having been said, car sharing services usually offer great variety in vehicle choices, which can be a benefit depending on your needs. If you can get through the initial process, you might find that this is a very comparable alternative to renting a car.
Taxis and rideshare
Rideshare services, like Uber and Lyft, can be very helpful alternatives, especially if your destination is in or around a large city or urban area. While you won't have a set of wheels of your own, these apps can get you a ride within minutes.
The primary issues you may face when relying on rideshare services are consistent pricing and availability during peak hours and during larger events such as music festivals. In other words, if there is a high demand for rides, the cost could go up, especially if there aren't as many cars on the road at a given time.
Like rideshare services, taxi services function very similarly and can be a viable alternative to a rental car depending on your needs. Again, pricing and availability are the main concerns.
Websites such as Rideguru
can help you find which rideshare services are available around your intended destination, and can even help you compare rates.
Depending on your destination, public transit and transportation can provide an inexpensive, but effective alternative to car rentals. Although larger cities like New York are known for their extensive transit systems, many cities have public transportation options
that are more than adequate.
U-haul and truck rentals
U-haul trucks are usually thought of as a way to transport your furniture when you're moving, but they're equally capable of getting you around during a vacation, too. Of course, you probably don't want to drive an 18-foot truck if you're not moving furniture, but U-haul often offers a number of other smaller vehicles, like pickup trucks and vans, that can be viable alternatives to car rentals
While this is a creative work-around, it can also cause problems of its own. U-haul trucks and other moving companies are just that - moving companies. If too many people are renting trucks for travel, it may lead to some situations where people who need to move are unable to find a rental. For that reason, you may consider asking the rental store representative about availability beforehand.
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