Renting a car is a very creative opportunity both for the car rental companies and the customers. It affords tourists and travelers the chance to own a car temporarily after paying an agreed fee, and it’s a profitable venture for the companies.
Anyone who is the least bit familiar with the car rental world knows the prices are never static. They change by the minute, and these fluctuations continue to characterize the car rental landscape.
In this article, we will take an in-depth look at the situation with facts and figures where necessary.
Table of Contents
Here’s the Short Answer to Whether Car Rental Prices Are Going Up Or Down:
By all indications and available statistics, it’s pretty factual to say that rental cars have been going up rather than down. According to authority automotive review site Car And Driver, car rental daily prices are now up $35 since late 2019, and it doesn’t look like the prices will fall anytime soon.
Why Are Car Rental Prices So High Right Now?
As we have mentioned before, rental car prices have been skyrocketing. In Kevin T. Dugan’s words, “To rent a car right now is to live through an expensive, frustrating American nightmare. Garages normally full-up with cars are these days sitting practically empty. Prices online are routinely over $100 a day for midsize cars — and that’s before insurance and other dubious add-ons. “
There are several reasons car rental prices are so high, and we will look into them detailedly.
The number one reason for the spike in rental car prices is an irregular surge in demand and a decrease in supply. Global economic challenges in recent years forced rental companies to get rid of a large number of cars on their fleets in a bid to survive, ergo low supply.
And, of course, the low supply of rental cars has invariably sparked a surge in car rental prices. Attempts by the big rental companies to revive their fleets have been to no avail due to the shortage of semi-conductor chips. This shortage affects the entire auto industry and has led to a short supply.
Basically, the reasons for high car rental prices all boil down to the not-so-simple issue of supply and demand. More people are renting cars than at any other time in history, and the rental industry plus the entire auto industry is experiencing a massive shortage. Spikes are almost inevitable at this point.
And it gets even worse during holiday seasons like Christmas and Easter. The demand is always incredibly high at these periods, and the prices go even higher.
Some experts blame the companies partly for the surge, citing growing avarice among them as well as detrimental capitalism. Others also believe the companies are more or less capitalizing on the sorry state of public transportation.
Not to mention the insane numbers of add-ons, fees of different kinds, as well as taxes that raise these prices to incredible heights.
And, as we mentioned before, experts in the industry believe there’s no end in sight to the surge, not anytime soon.
How Has Car Rental Prices Developed Over the Years?
According to Kayak, the average daily rental price for a car is $81, which means it has been up $35 (31%) since late 2019, when the average was about $46. As a matter of fact, car rental companies now push the rates to just over $100 during holiday seasons.
Below is a list depicting the annual growth of average global car rental rates between 2010 and 2017 as published by StatIsta:
- 2010: +0.3%
- 2011: +3.7%
- 2012: -5.2%
- 2013: -3.1%
- 2014: +2.2%
- 2015: 0.1%
- 2016 0.1%
- 2017 0%
- 2018: 0.6%
The numbers above reveal the relative stability of global prices between 2010 and 2018, with a few surges as well as slumps. However, since 2019, car rental prices are at an all-time high. NY Post even reported recently that rental car prices at the last Thanksgiving were 75% higher than it was back in 2019.
Have All Car Rental Companies Raised Their Prices?
The truth is, all car rental companies have raised their prices because of recent economic challenges. Some major rental companies in the U.S. even suffered a great deal of financial insolvency at some point.
Not to mention the global microchip shortage, which has led to a decrease in the supply of cars and consequently rental cars supply.
Hence, every single car rental company has raised their prices by a lot over the past couple of years and especially during holiday seasons.
However, as you could probably guess, even with the hike, some companies are more expensive than others. And while some raise theirs to incredible levels, some others keep it reasonable, given the circumstances.
Who Are the Cheapest Car Rental Companies Right Now?
Examples of car rental companies that offer cheap prices include Sixt, Budget, and Advantage. You can also use online third-party sites and agencies like Kayak, Hot Wire, Expedia, Orbitz, Priceline, Momondo, and Trip Advisor.
We can’t provide the exact rental fees as charged by the companies because, as we noted before, the prices fluctuate by the minute. However, we do know that these companies and sites offer the best prices on the market currently regardless of the fluctuations.
Are Car Rental Prices Expected to Go Up Or Down in the Future?
There appear to be divergent opinions from industry experts on the future of car rental prices. While some believe the prices will continue to surge, others believe things will “level out” soon enough.
In his interview with Forbes, Ernesto Suarez, an industry CEO, affirmed thus, “Prices and availability will likely start to level out once the majority of us fall back into our seasonal travel patterns.”
Conversely, another industry expert named Clarke was quoted to have said, “It’s very hard to predict, and I think we all wish we had that crystal ball for when the microchip shortage will end…It is looking like this is going to be something that is here to stay for a while.”
Amidst the differences in opinions and projections, however, our research revealed the microchip crisis that is affecting the auto industry is nearing its end. Hence, we expect and hope for a gratuitous plummet of car rental prices sooner or later.
What Caused the Shortage of Rental Cars?
We mentioned earlier that an apparent shortage of rental cars is the reason there have been spikes in car rental fees.
At some point during the 2020s decade, some rental companies had to sell off a huge part of their fleets in response to the economic quagmire. The general decline in the supply of cars has, however, hindered recent efforts at replenishment.
This general decline in vehicle supply is a result of the global microchip shortage plaguing the auto industry. This means there is a general decline in supply of vehicles which, as expected, trickles down to the rental car industry.