Renting a Car in a Tough Market

We know the rental car market is off kilter, but just how much is it to rent a car right now?

Tough Times

The pandemic has upended much of the automotive industry and car rental services in particular have been on a wild ride from the brink of disaster to record windfalls all in the space of a calendar year. For the rental car market, looking back at a tumultuous 2021 may help shed some light on what we can expect going forward into 2022.

So just how much is it to rent a car right now? Today’s national average, as of Dec. 2021, was $81 dollar per day. That’s $35 more per day than the industry average for 2019, which was $46 dollar per day. Still, today’s average is down from last summer’s heights which peaked at a $123 per day average in June.

So how did we get here? And what can we look forward to for the coming year?

The Chip Shortage Comes For Us All

To understand why rental prices are so high it’s necessary to look back to the early days of the pandemic. Back in the lockdown days of spring and summer 2020, demand for rental cars had plummeted. As a result, major rental companies like Avis, Hertz, and others, were suffering major losses and sold off significant chunks of their fleets and proceeded with layoffs. Hertz in particular was already in a precarious position financially with the pandemic economy tipping them into bankruptcy. (Interestingly, Hertz was overextended on lease payments for vehicles in their fleet, payments they owed to subsidiaries of …. Hertz. The company’s Byzantine financial structure probably hasn’t helped things.)

Once demand rebounded in 2021, rental companies began scrambling to replenish their fleets only to find a newly stressed automotive market. The global chip shortage, which you can read more about here, forced frequent production delays and pauses throughout 2020 and 2021. This and other supply chain issues have made it especially hard for manufacturers to get product out the door. As a result, rental companies’ fleets have remained depleted. In 2021, rental companies added just 750,000 vehicles to their fleets compared to over 1,739,000 vehicles in 2019.

Naturally, things have followed the basic law of supply and demand. With more Americans trying to find some solace in travel, demand for rental cars has rebounded just as the chip shortage has prevented rental companies from building their fleets back. Rental companies have capitalized on this mismatch by raising prices. Given the tangled state of global supply chains and levels of semiconductor production, experts don’t see automotive production resembling normal for at least another calendar year.

For rental car prices, that means they’re likely to say high and probably trend upward over the summer driving season.

Car Renting Advice

So, what can you, the savvy consumer, do to keep your costs as low as possible when renting a car? Here’s a few handy tips:

Book Early: The earlier you book the more likely you are to get the kind of vehicle that suits your needs, and one that’s at the location of your choice.
Make Multiple Reservations: Booking with more than one agency ensures you’ll get a car when you show up. Obviously, it’s a good idea to verify cancelation periods to avoid any charges.
Consider Joining a Loyalty Program: Joining such programs typically don’t cost you anything (besides yet more junk emails), and the benefit is often priority over non-members when it comes to getting the car you want or any car at all.

Check Prices: Comparing prices is always a good idea, but it’s an especially good one in such a hot and competitive market.
Rent Away from Airport: While this might make things a little more complicated, you stand to get a better price by renting from an agency location away from the highest demand areas.
Forgo Pre-Paid Gas: Check local prices before agreeing to foot the bill for pre-paid gas. Typically, this works out that you get a vehicle with a full tank and then don’t have to fill it up before returning it. We advise planning ahead and simply filling up before returning the car.

Limit to One Driver: There are often fees involved in adding more than one driver to your rental agreement. If you can, keep it to one person to save the added charge.
Double Check before Getting Rental Insurance: Check your own car insurance policy and your credit card policy before agreeing to additional rental insurance. Often rental insurance is included under these. Otherwise, do opt for the coverage because rental companies will often charge you for lost income on the vehicle for the days it’s at the shop if it’s in an accident.
Be Ready to Settle: Don’t be surprised when the rental company offers you a full-size van rather than the compact car you reserved on their website. In this market, it’s advisable to take what you can get.