money Shortages in rental cars are likely to 'spread' as weather warms up, expert says
Travelers are paying as much as 9,900% more for car rentals versus last year as shortages persist in sunnier parts of the U.S. But the inventory woes — and sky-high prices — will likely hit the entire country as summer sets in, according to one expert.
“The problems are predominantly in these leisure areas, but we expect the problem to migrate towards the Northeast, Midwest, and West as the weather gets warmer,” Jonathan Weinberg, AutoSlash’s founder and CEO, recently told Yahoo Finance Live. “We’re going to see the problem spread.”
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The shortages first sprung up over the winter in Sun Belt locales like Florida, Phoenix, and Las Vegas, and Hawaii, where rental car prices shot up as high as $500 per day after car inventories dropped during the pandemic.
“We're seeing prices anywhere from $200 to $500-plus per day and that's if you can even find a rental at all,” Weinberg said. “We've heard of many people that are canceling their trips because they simply can't get a rental car.”
In 2020, car rental prices were “as low as $5 a day in Hawaii,” Weinberg said.
“The days of those deals are completely gone now,” he remarked with a Hawaii car rental easily coming in at $500 a day, or 9,900% higher than a year ago. At those prices, travelers can expect to shell out a couple of thousand of dollars just for the rental alone.
This supply-and-demand imbalance originated at the outset of the pandemic when “rental car companies essentially went into survival mode,” Weinberg explained. “They pivoted and they sold off as many vehicles as they possibly could, as fast as they could.”
The inventory purge amounted to hundreds of thousands of vehicles across the major rental car companies, which got rid of 30% to 40 % of their fleets.
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They had no other option but to “basically right-size for the demand that they had at the time,” he said.
As vaccinations ramped up and people became more comfortable with travel, the pendulum swung back as early as February 2020, and car rental car companies “simply underestimated” the demand, he said.
Over President’s Day weekend, 18 out of the 20 airports in Florida were sold out of rental cars “and it's been an issue ever since,” Weinberg explained.
“I think people were tired of being cooped up at home and being cold in the Northeast and the Midwest and saw this huge migration of people down to Florida,” he said. “The rental car companies simply couldn't keep up.”
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
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