If you plan on traveling and will be dependent upon a rental car, rent the vehicle before you buy your plane tickets and reserve your hotel room.
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Spring is here. People are feeling pandemic-cabin fever and hitting or planning on hitting the road. That’s a good thing, and, accordingly, I hope to see many of you in Dallas this October as a result.
Before you make your plans, however, be aware that securing a rental car has become extremely challenging. I found that out the hard way when I attempted to rent a car over the Easter weekend and found no cars were available in the entire New York City area.
When you can secure a rental car, the cost, like a lot of scarce commodities, is through the roof.
Why is this happening?
The problem is simply one of supply and demand. The rental car companies, at the beginning of the pandemic, quickly realized that travel was going to decline dramatically, and demand for rental cars was going to plummet. As a result, they sold off significant portions of their fleets.
Now that people are traveling again, demand is up, but the rental car companies have not replenished their fleets. Here is how a Wall Street Journal article by Scott McCartney, “Wait, Where Did All the Rental Cars Go?“, explains what happened to Hertz:
Hertz, heavily dependent on business travelers at airports, suffered losses of $1.7 billion in 2020 and a 46% drop in revenue. In financial reports, the company said the pandemic prompted it to reduce commitments to purchase vehicles by $4 billion, and to dispose of leased and owned cars. In the fourth quarter, Hertz reported that its average number of vehicles in the U.S. was below 300,000, down 42% from more than half a million cars in the fourth quarter of 2019.
Making things worse is a scarcity of cars in general. Challenges with sourcing computer chips (see: “The Disruption Report #2: Chip Shortages and Containers Overboard“) are creating mayhem at car factories, which are unable to finish out car production without the chips. In other words, rental car companies that want to buy cars are not able to buy them because they aren’t available.
According to the article, it is going to be mid-2022 before things get back to normal. So, if you plan on going to Dallas or some other location and will be dependent upon a rental car, rent the vehicle before you buy your plane tickets or rent your hotel room. And if you get that rental car, be prepared to pay three times the price. Mr. McCartney, in his article, tells us: “Many travelers had grown used to renting a car for $39 a day or less before the pandemic. A quick price scan suggests how much has changed. The cheapest price at Hertz, National, or Avis for a one-day rental for Friday at Chicago O’Hare Airport, priced a week in advance on Kayak, was $117 for a Ford Fiesta economy car.”
Travel safe and have fun but get that rental car booked before you plan anything else.
