Rental car rates may increase due to lack of inventory

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Summer is upon us and travel bans have been lifted, meaning more Americans will need to rent cars. However, rental car prices may still increase and worse, travelers may not even be able to rent a new car. As you might guess, the lack of inventory is to blame.

Automakers still face chip shortages

Rental Car Signs | Horst Galuschka/picture alliance via Getty Images

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Rental car prices fell during the pandemic, but rose in 2021 when the travel ban began to ease. Meanwhile, the current global shortage has made it difficult for rental car companies to stay supplied with cars, so they have raised prices. Now rental fleets are still short of new car inventory, so prices could rise further this summer.

According The reader, “Manufacturers are still facing chip shortages and manufacturing delays, and in some cases are unable to supply cars to paying customers, so they are not interested in rental fleet sales at low profit.” Before the pandemic, rental fleets accounted for around 7-12% of the automaker’s total sales. But now they’re around 4-7%, says Europecar, a French rental company. This means that rental companies keep their old inventory and even buy used cars to supplement their fleet.

Used Cars In Rental Fleets May Look Weird, But They’re Good For Profits

A Hertz rental agent helps a customer.
A Hertz rental agent helps a customer. | Tim Boyle/Getty Images

While the use of slightly older cars in rental fleets might seem a bit odd to travelers, it makes sense for rental companies. The reader reports that rental companies are able to maintain higher profit margins by using older cars and when it comes time to sell them, they can sell them at a higher rate – thanks to the inflated auto market. Plus, the lack of new cars for rental companies to buy means they can keep their fleets smaller and more manageable.

Tips to save money when renting a car this summer

AVIS parking lot is full due to no customers during the COVID-19 pandemic at JFK airport.

The AVIS parking lot was full when there were no customers during the pandemic. | Lev Radin/Pacific Press/LightRocket via Getty Images

If you’re thinking of renting a car this summer and want to save some money, here are some tips according to NerdWallet:

  • Pass the airport: Instead of renting a car at the airport rental counter, compare these prices to other car rental companies in the city. When renting at the airport, you will be charged an additional fee for location convenience.
  • Shop online: Check sites like Kayak, Priceline, and cheapcarrental.com for rental rates from several companies. Then check the rental car’s website to compare prices and find the cheapest rate.
  • Discover the discount brands: Although rental companies like Enterprise, Hertz and Budget are very popular, they can also be the most expensive. Check out brands like Advantage and Dollar, which usually end up being cheaper.
  • Use your own insurance: The rental counter attendants are very good at selling you car insurance when you rent a car. But if your personal auto insurance has rental coverage, you can use that instead and save up to $30 a day on your rental.

Another tip is that you can also book a rental car at the last minute to save money. It may sound counter-intuitive, but it works. If you’re planning to travel this summer and need a rental car, every dollar you save counts.

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