Americans looking to rent a car or truck this summer are running into extraordinarily high prices, and that’s if they can find an available vehicle to begin with.
Over the past several months, the cost of rentals in the US has shot up on a mix of soaring demand and inadequate supply to match it. Customers are contending with prices like $400 a day for a car in Orlando or $700 for a sport utility vehicle in Arizona.
In June, it was about 88% more expensive to rent a car or truck than during the same time last year, contributing to the inflation hitting US consumer prices, according to newly released data from the US Bureau of Labor Statistics. That’s in comparison with a period when the pandemic shut down much of the US, forcing rental prices down, but the figures are still 76% higher than during June 2019, before the upheaval of Covid-19.
How car rental prices got so high
The pandemic has a lot to do with the skyrocketing rental costs. Last year, amid the plunge in travel, rental companies shed a large number of cars from their fleets as they tried to survive. Now they find themselves in short supply just as Americans are ready to start moving again. Companies trying to replenish their auto fleets are also running into issues due to a shortage of semiconductor chips hampering the auto industry. One analyst at Deutsche Bank who follows the industry described it to the Washington Post as an “extreme example of supply and demand.”
Car rental, like the airline and hotel industries, relies on dynamic pricing to determine how much a customer ultimately pays to book a vehicle. The response to supply-and-demand is immediate. Because rental companies have a fairly fixed amount of stock available, the more Americans try to get cars, the higher prices will go.