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