High Rental Car Prices Expected to Last until 2022, at Least

·3 min read
Photo credit: Joe Raedle - Getty Images
Photo credit: Joe Raedle - Getty Images
  • We know that prices for renting a car have gone up—way up—during the pandemic, but even with the numbers declining a bit in September, most analysts think they will go back up for the holidays.

  • Some experts think things will calm down in 2022, but others don't see prices getting back to normal until 2023. "By February and March next year, all bets are off," one expert told the South Florida Sun Sentinel.

  • There are many problems causing the higher prices, including a lack of new-vehicle production (chip shortage) and a large vehicle sell-off early in the pandemic. Solutions that rental-car companies are taking include keeping their fleet for longer than they used to and trying to move cars around the country so they are available where people want to rent them.

Anyone who's tried to rent a car in the last year or so likely discovered that prices were not what they once were, reaching many hundreds of dollars a day in some areas. Earlier this year, some tourists in Hawaii discovered the joy of saving money by renting a U-Haul truck instead of a standard rental car, for example. As travel starts to pick up again despite COVID's reach, more people might have to figure out similar alternative rental methods until at least next year.

While the costs to rent a car today aren't quite as high as they were earlier in the year, experts are offering different predictions for when the rental scene in the U.S. will get back to something more normal. Some say it will be at least 2022 before prices come down. Others predict a new spike coming this holiday season, including a spokesperson for Enterprise Holdings, according to the Washington Post. And one told the paper that he doesn't see things really getting back to normal until 2023.

"We're kind of in a shoulder season with people going back to school and work after Labor Day, but prices are going to spike back up again in Florida as Thanksgiving and Christmas approaches," the CEO of rental-car price tracker AutoSlash.com, Jonathan Weinberg, told the South Florida Sun Sentinel. "By February and March next year, all bets are off."

The problem, unsurprisingly, is a lack of rental cars. As we've written before, rental-car agencies sold off their excess vehicles during the early days of the pandemic and were caught off guard when demand returned sooner than expected. Now, with the chip shortage and other supply chain issues hampering production of new vehicles, these rental companies are unable to beef up their fleets.

Instead, rental companies are changing their policies to keep their cars longer before they cycle them out of the system. Vehicles are being moved away from locations that used to cater to business travel—which is returning, but still not as high as before the pandemic—and into southern vacation hot spots. Also, instead of a 25,000- or 50,000-mile cutoff, some are letting the cars they have reach 90,000 miles on the odometer. Some are also buying used cars at auction to make up for the new vehicles they can't buy. The Post reports that U.S. car rental companies only purchased around 800,000 new cars in 2020, compared to more than double that amount in 2019.

Which all comes together to suggest that rental-car prices will continue to be higher than expected for a while. We may not know exactly for how long, but Yahoo News, citing the
online rental company Kayak, said searches for rental cars for the upcoming holiday season are up 230 percent compared to 2019.

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