Those who want to rent a car for the holiday season this year may be in for sticker shock.
Travel site Kayak reports that the average cost of rental cars is up 75 percent from 2019 and 66 percent from 2020.
Jonathan Weinberg, the founder and CEO of Autoslash.com, also said the average price for a rental car nationwide is about $100 more per day than it was to rent a car in 2019.
In in-demand markets, like New York, renters could even pay as much as $300-a-day to rent a car, he told the New York Post, as AAA expects 48.3 million people will drive for the Thanksgiving holiday and 4.2 million people will fly.
And a study from Finance Buzz found that the average cost of renting a sedan in New York City is $261.17 per day while the average price of an SUV in the city comes in at $392.30.
The increased prices come amid sky-high gas prices and supply chain issues that are slowing down the production of new cars.
‘Things are pretty crazy at the moment, and the reason is because we have a massive shortage of rental cars, there is a semiconductor shortage – basically computer chips are not available with today’s modern cars [and] they require over 100 chips in each one,’ Weinberg told the Post.
Those renting cars for Thanksgiving may experience sticker shock as the the average cost of rental cars is up 75 percent from 2019 and 66 percent from 2020
The high prices come amid a global supply chain crisis which has slowed down the production of new cars
All modern cars are built with microchips on board to control everything from window motors to navigation systems. But when automakers were forced to shut down their factories last year, they canceled orders for the semiconductors that contain microchip processors.
Then when the economy came back, they were not able to procure the parts they needed to meet the demand for new cars.
‘Right now, new car dealers only have about 20 percent of the inventory that they are accustomed to having during a normal year,’ Ivan Drury, the senior manager of insight at Edmund’s, told the Post.
‘So we’ve even seen that rental agencies [who] want to buy X amount of units, they can’t even get those delivered to them.
‘Some rental car agencies are even resorting to used cars,’ he said.
And while rental car companies have brought in more vehicles over the past few months, the Chicago Tribune reports, they are not able to meet up with the demand for holiday travel, as millions of Americans are expected to hit the roads to visit loved ones – in many cases for the first time since the pandemic began.
AVIS Budget Group had about 434,400 vehicles in its fleet during the three-month period that ended on September 30, up 20 percent from the same period last year, the Tribune reports, after spending about $8 billion on new cars this year.
Hertz, meanwhile, had 34 percent fewer vehicles in its fleet over the three-month period, compared to the number it had in 2019.
‘Although we are fleeting new vehicles each month, we are not seeing the levels of supply required to fully replenish and rotate the fleet,’ CFO Kenny Cheung said in an earnings call earlier this month.
The company ordered 100,000 Tesla electric vehicles, expected to be delivered through the end of 2022.
As a result, the companies do not have enough cars to meet the holiday demand, with Todd Connors, a co-owner for Rent-a-Relic in East Bay, California telling the Mercury News that rental car companies are already starting to run out of cars for Christmas.
AAA expects 48.3 million people will drive for the Thanksgiving holiday
The scene in Denver as people drove to meet up with loved ones for Thanksgiving
Meanwhile, gas prices throughout the country have been steadily rising over the past few months.
They finally leveled off last week, averaging $3.41 per gallon nationwide on Friday, according to the American Automobile Association. That is seven cents higher than it was one year ago, USA Today reports, which means Americans are spending an average of $19.35 more each time they fill up their 15-gallon car.
Prices are higher in certain areas, though, with California seeing gas prices at $4.64 a gallon – over $1.50 higher than they were last year, according to Mercury News, while in the San Francisco Bay Area, prices are nearly $5 a gallon.
On Wednesday, President Biden asked regulators to investigate oil and gas companies allegedly falsely inflating their prices.
In his letter to FTC Commissioner Linda Khan, he asked the agency to investigate whether ‘illegal conduct is costing families at the pump,’ noting that there is an ‘unexplained gap’ in the price of unfinished gasoline and the price consumers pay for the final product.
‘Gasoline prices at the pump remain high even though oil and gas companies’ costs are declining,’ the president wrote.
But the industry’s lobbying association, the American Petroleum Institute, criticized Biden for the move.
Frank Macchiarola, the senior vice president of policy, economics and regulatory affairs called the president’s push for a probe a ‘distraction from the ongoing market problems, USA Today reports, and claimed ‘ill-advised government decisions’ are exacerbating the issue.
‘Rather than launching investigations on markets that are regulated and closely-monitored on a daily basis, or pleading with OPEC to increase supply, we should be encouraging the safe and responsible development of American-made oil and natural gas,’ he said.
Gas prices have also increased in recent months, leveling off last week at an average of $3.41 per gallon nationwide
Prices are even higher in California, where they average $4.64 a gallon
The president has blamed the rising gasoline prices on ‘the refusal of Russia or the OPEC nations to pump more oil.’
OPEC members produce about 40 percent of the world’s oil. OPEC has been coordinating production decisions with other suppliers, including Russia, as part of a larger grouping called OPEC+.
To address the problem, the president announced on Tuesday that the U.S. will release 50 million barrels of crude oil (a half a day’s worth of global crude oil consumption) from its Strategic Petroleum Reserve.
‘I also want to briefly address the one myth about inflation gas prices,’ he said in his public announcement of the policy. ‘They are not due to environmental measures. My effort to combat climate change is not raising the price of gas…’
‘The price of gasoline in the wholesale market has fallen by about 10 percent over the last few weeks, but the price at the pump hasn’t budged a penny,’ he added.
‘In other words, gas supply companies are paying less and making a lot more, and they do not seem to be passing that on to consumers at the pump… instead companies are pocketing the difference as profit. That’s unacceptable.’
In reaction to the official announcement on Monday, WTI crude oil on the NYMEX settled 2.3 percent higher at a five-session high of $78.50 per barrel.