Shortage of rental cars and new cars combined with increased demand leading to price hikes and travel changes
DENVER – Sailing in one of Justin Villa’s Jeep Rubicons is as Colorado as traveling is.
“You can accommodate four passengers,” Villa said. “The more, your luggage, the more your skis. Customers love it. “
Villa and his wife, Meagan, started renting the Jeep from Meagan in November 2019, and they now have a fleet of five Rubicon, plus a Ford F-250 pickup.
“You go to Enterprise, you might find it like a basic Jeep with no features,” Villa said. “What’s cool about us is that we can have a nice Rubicon. It has bigger tires, off-road capability.
The newlyweds are capitalizing on a growing trend: car rental sharing.
The company they use is called Turo (think Airbnb for cars).
“We were able to use her Jeep that she originally had,” Villa said. “We used it as a sort of trial and it worked well for us.”
It is certainly working right now. There are simply not enough cars.
There is a serious shortage of rental cars. There is also a shortage of new cars being manufactured, which Don Hicks of Shortline Buick GMC explains very simply.
“We should have 150 trucks in stock,” Hicks said. “I have 5.”
Hicks says a big part of the problem is a shortage of chips.
“There is a shortage of chips,” he said. “The world’s largest semiconductor factory burned down in Japan. It will take a few years to get it back.
Hicks says that on top of that, manufacturers were already behind schedule due to the virus and delays related to COVID-19 shutdowns on assembly lines.
“COVID was the factor,” Hicks said. “If anyone showed signs of COVID, everyone would go home. “
Hicks says one of the hardest things in the world is restarting an assembly line.
“When a car comes down the assembly line, the tires show up just in time,” he said. “The engine is coming right on time so they have no storage.”
If a single component is delayed, like microchips right now, that throws a wrench into the whole process. And with soaring demand, it’s the perfect storm.
“No one thought the auto industry would be this strong so soon after COVID,” Hicks said.
This is certainly evident in parking lots and at rental car counters.
“Basically overnight,” AAA regional spokesperson Skyler McKinley said. “The overwhelming demand for rental cars suddenly returned. “
McKinley says it all started when no one was renting.
“The car rental companies had their backs to the wall,” McKinley said. “When there was no demand. Really, there was no demand for rental cars in this country. So they sold their fleets just because these (cars) are on their books as a liability. “
Major car rental operators have sold more than 770,000 cars as the pandemic shatters demand. Now they can’t buy back inventory fast enough because there is no inventory to buy.
“Look – this is just the long tail of the effects of the coronavirus pandemic,” McKinley said.
Car rental companies are begging customers to stay with them and their stock prices are on the rise.
Avis Budget Group said in a statement: “As we return to a state of normality, we expect greater fluctuations in market demand… and are constantly adjusting our fleet to meet that demand.”
Enterprise, Alamo, National is seeing an increase in demand across the country and said, “We expect this to continue through the summer. If you are planning to travel … providing flexible travel dates and branch pickup locations in your search can also help expand your options.
McKinley says it works.
“Consider the airport rental locations,” McKinley said.
The problem for car rental companies is that during this time of crisis, travelers are finding out how to get around without a rental.
“You can go anywhere you want in a cab, or even in a Lyft or an Uber,” McKinley said.
“I looked at rental cars online quite briefly,” said a traveler at Denver International Airport. “I think the cheapest I could find one for was around $ 350 for two days.”
This surge in prices is discouraging many customers, perhaps for good.
McKinley says there are many ways to get around, especially in big cities.
“Most of the time you don’t need the car,” McKinley said. “So don’t pay all of that on top of that. In Denver, we have a super train to the plane. And I think this crisis will make Americans think: do I really need a car for this whole trip?
And that brings us back to Justin and Meagan.
“It’s good because you’re using an app,” Meagan said. “So there is no counter-implication. You don’t have to go to a counter.
Their philosophy: keep their prices competitive.
“I think it’s more important to have reservations than to have a higher price,” Justin said.
“They cost from $ 75 a day to – this one goes up to $ 100 a day,” Meagan said of the Jeep Rubicons. “And it’s fun to drive cool cars.”
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