Rental cars will stay expensive until automakers get more microchips

·2 min read

Just as with the microchip shortage, rental car prices have generated dueling headlines for most of the year. With chips, everyone agrees that the shortage is dire, and the disagreements center on how long it will take to get enough chips back in the system for automakers to return to reliable production. With rental cars, everyone agrees that prices have been breathtaking, and the disagreements center on when will it stop costing a house payment to rent a vehicle for a week. This week, Business Insider wrote a piece with the headline, "Renting a car could be much easier this fall," while an L.A. Times headline said, "Why renting a car will be a pain until 2022." The Times' take is the better bet right now.

Why? Because until there are more microchips, the entire vehicle market will remain constrained. Consensus seems to be that the chip shortage will last at least until 2022, preventing enough vehicles from entering the market to satisfy demand. Rental fleet operations have been suffering and will continue to suffer because of this, as production cuts eliminate millions of vehicles from the market — Ford alone said it will get 1.1 million fewer vehicles off assembly lines this year, while Nissan said the chip shortage will shave 500,000 vehicles off its 2020 production. In response, the Times reports that rental car agencies are trying to buy back cars they'd sold at auction, and are keeping the cars they have for tens of thousands of miles longer than they used to.

On top of that, not only are rental companies begging for cars, they're begging for workers. The result is that if a traveler can find a rental car at a tolerable price, he or she might endure a customer service nightmare trying to get the car off the lot.

Business Insider could be in the right if we read "much easier" as "slightly less expensive." The Times said average rental prices were around $45 per day at the beginning of 2020, hit $120 per day during the summer scrum, and are down to about $80. But with more holidays right around the corner, a return to triple-digit pricing probably isn't far away. So book early, be flexible, consider renting vehicles in urban locations instead of at the airport, and as one outlet suggested, "You'll want to plan to spend a little extra." Good luck.

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