florens

Is there an end of this apocalypse in sight? It doesn't seem so, does it?

ChurnieEls

You won't see this soften until the supply constraints with microchips ease, and even then it'll lag for a period before manufacturing catches up.

BugsyPal

Things are rough out there, and aren't going to get better anytime soon.

At moment car rental places have the upper hand (too few vehicles and high demand), thus are able to pretty much call the shots.

Why It’s So Expensive to Rent a Car (nymag.com)

Places sold off good part of their fleets during covid crisis last year, but now are finding (like everyone else) themselves dealing with a shortage of new vehicles due to chip and other manufacturing shortages.

Rates are off the hook but that sticker shock is coupled by new rules and closing times. Finding any place open 24/7 or even for full days (on weekends) is becoming impossible. Thus you're locked into two, three or more days rental simply because cannot return vehicle until place opens. Am hearing more Hertz and Enterprise locations do not allow off hours return to garage. Renters must keep vehicle until location opens for normal business hours.

Don't know about anywhere else, but here in NYC area people who once rented frequently are just buying vehicles instead.

BugsyPal

Hertz is hurting more than others because they sold off huge part of fleet during that bankruptcy. Now they're scrambling to find new vehicles just as that market is suffering from manufacturing related issues across the board.

If Audra McDonald couldn't get a car from Hertz, what does that say about the rest of us? *LOL*

https://www.washingtonpost.com/trave...ortage-prices/

Auto Enthusiast

I've seen several posts about large vehicles accumulating abnormally high mileage, ex minivans and Explorers with 65k+. This could be a mixture of 3 things: 1) Keeping cars longer, since demand is high and new cars are hard to get now, 2) Buying used cars that have higher mileage to start, and 3) People are renting for long roadtrips, instead of or in addition to flying, so miles rack up faster.

Possible implications for whenever chips and new cars become more available again. Might the next rounds of orders go not to expanding the fleet, but to replacing cars that are getting so old they have to go? In which case, fleet size, and shortages, continue?

Auto Enthusiast

I also read an article yesterday that Ford in the US is thinking of moving to a business model similar to what they do in Europe: Build cars to order, not for inventory. So the customer orders the exact specifications they want, and dealers don't have spare cars on the lot they need to mark down to get rid of. Presumably that means no/few deals for fleet sales, right? And surely competitors will do that, too.

sdsearch

End, no. Lessening perhaps if travel demand goes down in fall relative to summer. But it would likely return whenever there's a period where travel goes back up.

m907

That would be a major change to the entire business model and dealer network. Plus I think fleet sales, in normal times, are still a major profit source for the car makers.

MrEmmettBrown

We all know that car rental prices vary due to several factors, especially in recent times where many car rental companies have had no revenue in recent months and have had to dispose of part of their fleet. But despite everything, nothing justifies such high prices.

MrEmmettBrown

LOL mere mortals

Mr. BoH

Demand vs supply justifies the high prices. They wouldn't be setting them that high unless some were willing to pay.

AutoSlash

Agreed. If the prices were so high that nobody was willing to pay those prices, then ostensibly, the prices would come down. Most rental companies are running at or close to 100% utilization, so from that perspective, whether folks like it or not, rentals are priced at what the market will bear.

Auto Enthusiast

Utilization also reflects a small fleet, not necessarily people willing to pay. You might only have 9 customers consistently willing to pay $200/day rates. That means they believe they can wring $200/day of value in use, such as taking a long roadtrip. Someone just driving 25 miles a day between an airport, hotel, grandparents, friends, theme park, and souvenir store, probably would not be interested. Maybe at the old rates, but not now, leading to the use of alternatives, or cancelling the trip.

In the past, there might have been 50 cars, but now there might only be 10. The remainder of those 50 cars might have been going to people paying $35-55/day rates. But now with just 10 cars, the agencies can only serve a max of 10 customers.

It's likely that rental companies will continue with small fleets, to keep up an artificial shortage and very high prices, even once availability of new cars opens up some more. Think about it: Just serving those 9 customers with 10 cars means fewer acquisition, disposal, registration, insurance, cleaning, etc. and other fees. It also means being able to get by with a smaller facility, which translates to needing to hire fewer employees and pay less in station leasing.

Fewer customers in the facility, and likely fewer people with elite status, could mean a more personalized customer experience and higher satisfaction for those who remain. If this time is not used wisely to upgrade the customer experience, given the high prices and likely higher expectations, then even with just a few cars, there could eventually be even fewer interested customers.

stimpy

I'm in the middle of a $400 per week Hertz rental from NYC. They set me up with a 2021 Sonata, and I then asked if they had a SUV. They gave me a 2021 Buick SUV with about 3000 miles.

MrEmmettBrown

I couldn't agree more with you, but in some cases it's an abuse. To give an idea, in Vancouver the daily rate reached over $1,100 this August according to this research: https://gbsnresearch.com/insights/da...und-the-world/

But anyway, it really is the good old "law of supply and demand".