The rental car industry is dealing with some major issues right now. The nationwide car shortage has spread to rental cars and reduced inventories.
Demand is through the roof and many are opting for rental cars instead of owning their own. The end result is that rental car prices are skyrocketing. Prices are expected to double in the near future.
There are so many factors that go into a car rental price. Add-ons create the potential to add hundreds to the final price.
Read on to learn how much does it cost to rent a car. Explore tips for renting a car and what drives up the total price.
How Much Does It Cost to Rent a Car?
Rental car pricing starts with the base price. You are charged a daily rate that varies depending on a number of different factors.
In July 2020, the average daily rate for a compact car was $89. One year later, this rate nearly doubled to $166 per day.
Location is one of the major cost drivers for rental car prices. In some airports, rental cars are going for $250 to $600 per day.
It is important to remember that this is just the base price for a compact vehicle. Some people need to purchase add-ons like car insurance or infant seats that drive the price up even further.
Prices are so high that many people are wondering how to rent a car. For some, prices are so high they are looking for alternatives. SHAiR Your Car is allowing peer-to-peer car sharing to make short-term arrangements more affordable.
What Is Driving the Rental Price Increases?
Skyrocketing prices are a direct result of the Covid-19 pandemic. When the pandemic hit in 2020, the American people largely stopped traveling.
Rental car companies were sitting on enormous fleets of unused vehicles. To reduce cost and stay efficient, major rental car companies decided to sell their excess vehicles.
At the end of 2019, Hertz maintained a fleet of more than 516,000 vehicles. By the end of 2020, the fleet was fewer than 300,000 vehicles. This supply reduction naturally increased rental car prices as Americans started to travel again in 2021.
You may be wondering why rental car companies did not replenish their fleets. Unfortunately, there is a nationwide shortage for vehicle manufacturers as well.
Vehicles cannot be completed on the assembly line due to computer chip shortages. The vehicles that are finished typically are steered towards individual consumers. This is because private consumers provide a higher profit margin than fleet customers.
Are Rental Prices Going to Return to Normal?
In the short term, the answer is no. The vehicle shortage will likely continue through the end of the year.
There may be relief on the demand side. As the coronavirus delta variant wreaks havoc, the American people may travel less. This would relieve demand and bring down prices.
Is It a Good Time to Rent a Car?
Every person has a different budget. Car rental prices are undoubtedly higher, but you may have no choice. Other people rather pursue ride-sharing services or acquire a car from less traditional sources.
If you enjoyed this article about how much does it cost to rent a car, check out our blog for more great content.