A comedy of errors that only a pandemic could produce has left the parking lots of rental car companies bare. This has pushed prices up and left travelers scrambling to find transportation, something that previously didn't even need to be booked in advance. However, with no immediate solution likely, there are a few things you can do to try and secure a car for your trip.
WHERE ARE THE RENTAL CARS?
Rental car companies sold off their cars to keep their businesses alive through the pandemic. Many brands also backed out of new vehicle purchase commitments. Of Hertz, the Wall Street Journal's (WSJ) Scott McCartney reported that the "pandemic prompted it to reduce commitments to purchase vehicles by $4 billion." This combination of actions left Hertz with "below 300,000 [vehicles], down 42% from more than half a million cars in the fourth quarter of 2019."
The cars that were sold can't be repurchased because households seeking to avoid public transit for health reasons purchased them off used-car lots. Car rental companies are trying to purchase new vehicles but are facing problems.
Today's computer-run vehicles need multiple semiconductors or chips. But, unfortunately, all the technology required for the work-from-home trend uses the same chips, which has caused a shortage.
This has caused car manufacturers to "halt production at several North American plants," leaving fewer cars for rental companies to buy. Bloomberg reported Ford alone saw production “down 17% in the first quarter.”
Executives from both Avis and Hertz specifically mentioned the global semiconductor shortage when discussing "tighter fleets" and an inability "to receive new vehicle orders."
EFFECT ON TRAVEL
With car inventory low, prices have gone up on available rentals. This follows a fundamental microeconomic law, that when demand is high, and supply is low, prices rise. As reported in Bloomberg, Jonathan Weinberg of AutoSlash reports "seeing some eye-popping numbers" ranging from "$200 a day in Hawaii and $600 a day in Puerto Rico" for a rental car.
Unfortunately, the chip shortage will take months to resolve. The WSJ reports that Neil Abrams, "of Abrams Consulting Group, thinks it will be the second half of next year before" there are enough cars. Until then, here are a few ways to become a savvier traveler to avoid sticker shock and sold-out car lots.
BOOK EARLY
Don't delay in booking your car. It would be wise to book a car within 24 hours of booking your flight. That way, if you can't find a vehicle, you can cancel your flight without penalty. Also, by booking as far in advance as possible, the chances you'll find an available car are higher.
TAP YOUR BENEFITS
Rental reward programs used to be a way to score upgrades. While the chances of this are slim with limited inventory, there still are some benefit programs that may increase your likelihood of securing a vehicle. For example, Hertz Gold Plus Rewards membership allows renters to skip visiting the counter and head straight to a vehicle of their choice in a specified zone. This benefit can help renters beat other consumers to a vehicle when the shuttle drops off several renters at the same time.
Credit card programs can also help renters secure savings. For example, American Express Platinum Cardmembers can save 15% or more off published rates by using discount codes provided by American Express at participating companies.
PRE-PAY RESERVATIONS
When renting a car, you'll often be shown two prices. You can save some money by booking and paying for your car simultaneously, though double-check the effect this has on your ability to cancel.
Also, if a rental company has only one car left, a pre-paid customer may be more likely to get the last vehicle than one that has yet to pay.
CHECK OFF-AIRPORT LOCATIONS
Off-airport locations are an excellent option for saving some tax dollars and fees, and they may have better inventory. When searching online, instead of typing the airport code as your pick-up location, key in the full city name to search for rental locations.
CONSIDER PROBLEM AREAS
According to AAA research, top destinations this year include Orlando, Las Vegas, Honolulu, Anchorage, Myrtle Beach, Nashville, Denver, and Colorado Springs. Expect these destinations to have limited rental car availability based on the number of travelers visiting. Because there is so much to discover in the United States, consider visiting another location this year that might have better rental car availability, and save popular destinations for next year when car rental availability conditions improve.
