$ 300 a day for a Kia Rio. Why rental car prices have gone crazy

A year ago, air travel narrowly came to a halt, leading to a glut of rental cars. Rental companies parked their cars in unused lots at ballparks across the country, and cars were rented for a fraction of their normal price or sold as used cars. The industry sold more than half a million cars, about a third of its combined fleets, just to generate the cash they needed to survive the crisis.

Last weekend in Florida, 18 of the state’s 20 largest airports were totally car-free, according to Jonathan Weinberg, CEO of AutoSlash, a site that helps car renters find the lowest price. He said cars were also sold out at the Phoenix airport and much of Hawaii. He expects the same to happen next weekend, and most of the next weekends in the summer for those hoping to reserve a car.

“We are looking for rates of $ 500 a day in some places,” he said. “Last spring we saw rentals for $ 5 a day in Hawaii. I’ve never seen that. Now I would kill for a car for $ 300 a day.”

A search of car rental sites on Wednesday showed that a Kia Rio, a subcompact car, costs $ 300 a day in Orlando next week. In Maui, Hawaii, the only rental available next week is a Yukon for $ 500 a day.

The shortage manifests itself in vacation destinations. It is still possible to find cars in other places, like Omaha, for around $ 300 a week, instead of a day.

“The supply of rental cars is usually tight during spring break, but not like this,” said Chris Woronka, an analyst at Deutsche Bank who follows the industry. “You usually have 30% more cars.”

He predicted a series of travel price spikes above 2019 levels as travelers begin to return, especially for those who don’t book early. Suppliers (airlines, hotels, or car rental companies) don’t want to regain capacity too quickly only for trips to decline again.

“I think he’s going to have this readjustment period,” he said. “During this period of pent-up travel demand, but not enough supply, hopefully prices will be higher than in the past. Travel providers are testing the waters. We are in uncharted territory. Everyone has lost a lot of money on the last year “.

While airlines grounded planes and hotels closed some floors or temporarily closed in some cases in 2020, it was easier to bring that capacity back online with a rebound in travel.

“Rental cars are an extreme example,” said Woronka.

Book well in advance

The car rental companies declined to comment directly on prices or their vehicle offerings, but confirmed that the situation is extremely difficult and recommend that customers book well in advance of their trip.

“There are challenges in supplying new vehicles, due in part to the recent global chip shortage that affects the availability of new vehicles,” said Sara Miller, a spokeswoman for Enterprise Holdings, which includes the rental car brands Enterprise, Alamo and National. “We are working closely with our partners to continue adding vehicles to our fleet … [and moving] vehicles where possible to support regional peaks in demand. “

Hertz, which is seeking court approval to exit bankruptcy, also includes the rental car brands Dollar and Thrifty. It sold more than 200,000 of its US fleet last year, about 42% of its supply, leaving it with just under 300,000 US cars in the fourth quarter. Rival Avis Budget (CAR) sold 25% of its fleet. The private company does not report results.

“We are seeing an increase in demand for leisure travel at vacation destinations across the industry, particularly during peak travel times like spring break. Given where the industry was during this time a year ago, we are happy to help. travelers to get back on the road safely, “said Lauren Luster, a spokeswoman for Hertz. “Due to increased demand and smaller fleets in the car rental industry, availability may be more limited.”

Ignoring the CDC's warnings, more than 1 million passengers have flown from US airports for 10 days in a row.

Car rental companies have started buying cars again, but after last year’s losses and air travel still only half of what it was in 2019, those purchases are at a slower pace than pre-sale levels. pandemic. New car purchases by rental companies fell more than 90% in May and June like last year. They have now bought nearly 400,000 cars in the last five months, but 40% less than their purchases from the previous year, according to data from Cox Automotive.

“Car rental companies would rather be under-supplied and see some higher prices than to have an oversupply again because they overestimated the rally,” said Woronka.


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