Car Rental Prices Could Double by August Amid a Nationwide Shortage: Report
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Demand for a rental car is hotter than ever this summer, the NY Post reports.
The average daily rental cost of a vehicle hit a record high of $63.75 last month, a 50% increase in some areas, according to data collected by Jefferies, a New York investment firm.
With the economy accelerating back to life, consumers are caught in the middle of strong demand and short supply.
Car demand has been shifting into high gear for months due to a microchip shortage and soaring copper demand, Fox Business Network reports. Yet supply has shrunk as rental car companies reduced their fleet during the pandemic to cut costs.
But the latest spike in rental prices is something that’s never been seen before, says Jefferies analyst Hamzah Mazari, who’s been tracking rental prices from Avis, Hertz and Enterprise since 2015.
The median daily price at Avis jumped to $68.07 in May, 50% higher than the median price the company charged between 2015 to 2019.
Avis’s median price then rose from $81.59 to $94.51 between June and July and is hovering at $103.40 for August.
Hertz and Enterprise are also seeing similar jumps.
Mazari estimates prices won’t drop until next year when new car production normalizes and rental companies can add more cars to their fleets.
In the meantime, Mazari says, "You may see consumers resort to mass transit."
Some consumers are already doing just that.
Brooklyn, NY resident, Gordon Price says he used Uber for his entire vacation in Puerto Rico because every car rental agency was booked. He did find a KIA Sorrento for $400 a day.
“I was not amused," Price said. "I also wasn’t paying it.”