Hertz and other rental car companies are turning away potential renters due to a lack of inventory.
Airports are getting busier these days as more Americans take to the sky, despite another surge of COVID-19. But travelers who don’t carefully prepare before heading out could be in for a shock, especially if they try to book a last-minute car rental.
Someone arriving at Kahului Airport on the Hawaiian island of Maui will find no vehicles available at Hertz, the nation’s largest rental car company, this weekend unless they booked well in advance. Avis and National, two key competitors, also are sold out, TheDetroitBureau.com discovered. Those few local chains with vehicles to rent are pushing up and over $100 a day for even the most no-frill models, easily double pre-pandemic rates.
But that’s better than what a customer might find elsewhere. According to some reports, renters are finding rates running as high as $500, even $700, a day in some popular vacation resorts. And the situation isn’t likely to ease up anytime soon.
Tough times for rental industry
Business at rental car agencies, like Hertz, were down significantly, due to the pandemic so no new vehicle replacements were purchased.
Even heading into last year’s pandemic, things were tough for some of the major car rental chains. When COVID-19 struck, and travelers around the world were forced into lockdown, things blew up. Last May, Hertz filed for bankruptcy and moved quickly to shed assets and raise capital. One of the critical steps was shedding large chunks of its massive vehicle inventory.
Many competitors followed suit, and the timing worked out well. Even as new car sales tumbled last spring, the used car market turned red hot, letting rental companies earn a premium on vehicles they sold off.
Meanwhile, they canceled purchases of new vehicles by the millions. The U.S. new car market ended 2020 with total sales of around 14.6 million, down nearly 15%, the rental slump taking much of the blame. Remove weakened fleet demand and the industry did far better than expected. In fact, overall sales largely returned to pre-pandemic levels by late 2020, automakers finding retail buyers for many of the vehicles that previously would have gone into rental fleets.
Even before the latest crisis, many auto manufacturers were looking to cut back on rental sales. They’re simply not very profitable. So, that sets things up for a crisis in 2021 — and it’s all the worse because carmakers are themselves facing shortages of critical components and raw materials, including not only computer chips but things like seating foam.
Those smiling rental agents are putting on a brave face as they deal with tourists without vehicles because they didn’t book in advance.
That’s led to a growing list of assembly plants cutting production levels or even temporarily closing. That makes it difficult for manufacturers to produce enough vehicles for their loyal dealers, never mind fickle rental car companies.
Future doesn’t look better
With no end in sight for the chip shortage alone, the situation isn’t likely to get any better soon for companies like Hertz, Avis or Enterprise.
“We anticipate this continuing throughout the coming months, especially in pockets of the country popular with travelers,” Enterprise spokeswoman Lisa Martini told The Washington Post this week. The best it said it could do in the short term is to move vehicles out of lower-demand markets for those in more popular destinations. But that’s just a band-aid as rental fleets are so much smaller than in the past.
And it won’t much help customers in places like Detroit where Hertz on Friday was quoting a rate of $104.30 a day for a Chevrolet Spark, as much as triple what the company expected for that minicar before the pandemic.
Some travelers are looking for non-traditional alternatives such as Turo. The decade-old service acts as a middleman between private vehicle owners are renters. In years past, much of its business came from those looking to drive something unusual, like a sports car, or perhaps a pickup to help them do a weekend of home renovations. Now, however, it is finding demand surging from those who can’t find anything at a traditional rental counter.
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