Companies such as Hertz and Avis sold off thousands of their cars as business travel plunged. Now, automakers in a crunch of their own are in no hurry to replace them says a report from NBC News.
"Heading to Maui for a pandemic-delayed vacation? Better make sure you line up a rental car well ahead of time — if you can find one.
Travelers arriving at Hawaii's Kahului Airport without a reservation for an April weekend will find Hertz, Avis, Enterprise and other major car rental companies completely sold out.
If a vehicle is available with local competitors, it could run several times more than normal — with some tourists reporting car rental prices of more than $700 a day, or $1,000 for a convertible.
The situation repeats itself at popular destinations across the country and many places abroad. Even in less glamorous destinations, like Detroit, it can be difficult to find the normal choice of vehicles, while prices for even the most basic models have surged. At Detroit Metropolitan Airport, the current weekend rate for a Chevrolet Spark microcar at Hertz is $104.30 a day — almost three times the pre-pandemic price.
“We’re seeing a surge in demand for leisure travel in vacation destinations across the industry,” Lauren Luster, a spokesperson for Hertz, told NBC News in a statement.
However, “because of the spike in demand in some cities and regions and tighter fleets across the car rental industry, availability may be more limited."
Sara Miller, spokesperson for Enterprise Holdings, said in a statement the company is “leveraging our large network of neighborhood and airport locations to move vehicles where possible to support regional spikes in demand.”
More than one year into the pandemic lockdown, many Americans are eager to get back out on the road. But, while travel has been on the rise, that’s not the only reason why there’s a sudden shortage of rental cars.
When lockdowns went into effect, business travel dried up and Hertz's revenue plunged. The company filed for bankruptcy protection last May and then moved to sell off a large portion of its rental fleet. By the final quarter of 2020, the company reported having around 300,000 vehicles in its fleet, 42 percent lower than a year earlier.
As new car sales tumbled last spring, the used car market turned red hot, meaning rental companies selling off their vehicles could earn a premium. Avis reported that it “profitably disposed” of 250,000 of its own vehicles in 2020.
With demand still low, rental firms slashed orders for replacement vehicles. During the third quarter, fleets overall accounted for just 10 percent of new vehicle sales in the U.S., down from a traditional 15 percent, according to Tyson Jominy, vice president of analytics for J.D. Power, and rental companies accounted for much of that decline.
Faced with the big cancellations by companies like Hertz, Avis and Enterprise, U.S. automakers shifted production capacity to the retail side, Jominy said. And now, they aren’t in a rush to shift back.
“Rental fleets are generally low profit,” Jominy said. Manufacturers “are not going to send vehicles to the rental side when (they) can make a lot more money through their retail channels,” he added.
Travelers are advised to schedule rental cars as far in advance as possible."