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The rental-car shortage is easing — but could return with the holidays

Experts say the shortage may not normalize until 2023

(iStock/Washington Post illustration)

Andrew Knight knew the rental-car situation had gotten out of hand earlier this year; searching for vehicles, he found “sky-high” prices.

But on a recent trip to several West Coast cities, the software engineer based in Raleigh, N.C., was able to find cars for what he considered more reasonable rates. He ran into zero issues in Seattle. Then he landed Saturday in Los Angeles and took a shuttle to his rental-car site, where he waited for a car near a “pretty empty” parking garage.

After learning he would have to keep waiting for a vehicle to be returned — and miss the window to make it to a scheduled walking tour — Knight, 32, canceled the rental and relied on friends and ride-sharing services for the weekend trip.

His initial optimism that “rental cars have normalized again; this is good” turned into “oh, maybe not.”

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After a spring and summer of low inventory, soaring demand and high prices that became known as the “car-rental apocalypse,” experts say the situation is less dire. But that doesn’t mean the rental-car experience is back to normal — or that the holidays won’t bring their own mini apocalypse.

“Things actually are better than they were,” said Chris Woronka, a leisure analyst at Deutsche Bank who follows rental-car companies. “But that’s a pretty low bar.”

He said rental-car companies have added to their fleets after selling hundreds of thousands of vehicles when people stopped traveling in 2020.

Greg Scott, spokesman for the American Car Rental Association, said that in some cases, companies are buying vehicles back from used car auctions that they sold to six or eight months ago. Some are just holding on to their cars longer than normal, which means travelers might notice higher mileage on their rentals.

“We probably have gotten better at perhaps responding to the demand with the supply of vehicles we have,” Scott said. “But I would by no means say that the challenges are past us.”

Woronka said demand dropped as summer dwindled, a typical seasonal pattern that included the atypical twist of the delta variant surge. And vacationers figured out ways to get around without the traditional rental solutions — or changed plans to avoid needing a car.

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Fewer markets are reporting shortages or complete sellouts of rental cars, he said. And prices are less severe than earlier this summer, though still higher than before the pandemic.

Travel app Hopper says the national average for a car rental is $99 a day, up from $83 a day in early September — but a break from $110 a day in July.

“We’re expecting these prices to increase going into the holiday season,” Hopper spokeswoman Lindsay Schwimer said.

One underlying contributor — a dearth of new cars due to a worldwide shortage of semiconductors — is getting worse. At the same time, the labor shortage that has affected much of the travel industry has not spared car-rental companies.

“In terms of predicting the future, I can’t,” Scott said. “I think that what I’m hearing about new cars is that we’re probably talking 2022 before we get a grip on the supply chain. I don’t think anybody is predicting a return to quote-unquote normal in 2021.”

Woronka said he wouldn’t even expect rental-car inventory to be fully available by next summer, saying it could be until 2023 when the situation is normalized.

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Enterprise Holdings spokeswoman Lisa Martini said in a statement that the company, which includes the Enterprise, National and Alamo brands, is seeing increased demand all over the country.

“We anticipate strong demand throughout the next several months, including the holiday season,” she said in the statement. “Our teams continue to work hard to meet the increasing leisure travel demand and support customers’ broader transportation needs.”

What that means for holiday travelers, Martini said: Reserve a vehicle as early as possible and be flexible with travel dates and pickup locations.

Woronka said there is no penalty to booking a vehicle for the holidays — or even peak travel times in 2022 — now.

“If the price is more than you want and you make that reservation and for some reason the price goes down, you can always rebook at a lower price,” he said.