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As Prices Heat Up, Elite Fleets Up

 

Car renters be warned: surging demand and a shrunken supply of cars equals bad economics as summer travel season looms. The coronavirus pandemic devastated the travel industry, and car rental companies responded by shedding cars in their fleets, just as airlines did with planes.

While Elite Rent a Car has maintained a consistent auto fleet and competitive pricing throughout the coronavirus pandemic, we believe it is important for our customers to be aware of:

  1. the circumstances affecting supply and demand of rental cars;
  2. how the vaccine is increasing demand for cars due to vacation travel;
  3. why the initial drop in demand at the beginning of the pandemic caused a rental survival mode;
  4. the supply chain bottlenecks faced to replenish fleet inventories;
  5. the big business profitability drivers causing a lag in meeting demand;
  6. how car renters are coming up with creative alternatives during the transition;
  7. insider tips in case you are in a situation where you need to rent from another company.

Supply and Demand

Economics 101: everyone knows the rental car companies need cars. Duh, right? Well, due to the pandemic’s impact on the auto economy, rental car companies are now having to purchase cars for higher prices and hence renting for higher prices, a not so pleasant case of “trickle down economics.”

Vaccine Vacations

More specifically, the supply and demand cycle is being driven by the fact that as people increasingly become vaccinated against COVID-19 and desire to travel, rental companies are having a difficult time meeting demand due to a nationwide rental car supply shortage.

Fleet Flight

To take a step back, when the pandemic first began, rental car companies saw demand drop by as much as 90%. Businesses essentially shifted into survival mode, with rental giant Hertz being forced to file for bankruptcy reorganization and quickly start selling thousands of used cars in its fleet.

Bottleneck Barriers

Fast forward, and rental companies are having difficulty replacing their fleets due to slowdowns in the manufacturing. Hertz and Enterprise Holdings say they are working closely with automakers to add cars to their fleets as quickly as possible, a process complicated by a microchip shortage that has temporarily closed some auto factories.

Profitability Priorities

This gap in supply and demand will take several months to solve because rental companies cannot bring cars back into the fleet right away and fleet sales have become less profitable than retail for automakers that are prioritizing more profitable sales from trucks, SUVs and higher trims. The fleet channel is simply not as profitable as retail since there are usually less-equipped models in the fleet channel.

Auto Alternatives

While things are finally looking more positive for the travel industry due to increased demand following the vaccine, there is still a transition period underway where companies need to be able to replenish their inventory to fulfill demand. Rental cars are so scarce in some areas that travelers are resorting to U-Haul rentals. Other travelers are turning to rideshares such as Uber, though rideshare prices have also increased and do not necessarily provide an option for larger groups.

Elite Fleet

Elite Rent a Car has consistently maintained our fleet and competitive prices for the greater Houston community amidst the challenges of the coronavirus pandemic.

Elite Rent a Car has consistently maintained our fleet and competitive prices for the greater Houston community amidst the challenges of the coronavirus pandemic.

If you must rent from another company due to circumstance, Elite Rent a Car recommends the following tips for successfully managing your rental car journey during the vaccine transition:

  1. Compare a la carte prices and vacation packages.
  2. Gather every discount you can find
  3. Try different travel dates if your plans aren’t set
  4. Shorten the length of your reservation – without shortening your vacation.
  5. Book the car for longer than you need it and return it early.
  6. Consider an off-airport location.
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