That's how many months in a row the price to rent a car has increased by double-digit percentages, as an unprepared car rental industry struggles to meet a sudden and ongoing surge in demand.
Prices for car and truck rentals shot up 12.1% nationwide in May compared with the month before, the Bureau of Labor Statistics said Thursday in its monthly report on the Consumer Price Index, a gauge of inflation. It was one of the largest increases among all categories tracked by the index, and follows an increase of 16.2% in April and 11.7% in March.
Anyone planning a summer vacation will have to set aside a hefty car budget if they intend to drive once they get to their destination. For example, the cheapest small sedan from Hertz at Los Angeles International Airport would set a traveler back $677.59 for one week. In Hawaii, rental cars are so hard to find and so expensive that travelers are renting U-Hauls just to get around, said Neil Abrams, an auto rental industry consultant. Abrams himself chose to have his car shipped to New York from Florida for a month-long business trip rather than pay exorbitant rental prices.
The skyrocketing rates—as much as 100% above pre-pandemic levels in some markets, Abrams said—are a result of business decisions made by car rental companies early in the pandemic. When COVID-19 hit, demand for rental cars plummeted, and companies were forced to sell off much of their fleets. The move saved their businesses, but left them hard pressed to serve customers once the travelers started to come back.
“Demand has bounced back a lot quicker and at an accelerated pace than forecast,” Abrams said. “I haven’t seen these kinds of rates probably ever, and I’ve been involved in the industry since the mid-70s. It is quite extraordinary.”
What’s more, companies are facing extreme difficulties replenishing their rental fleets, said Charlie Chesbrough, senior economist at Cox Automotive, an auto sales consulting company, in an email. Car makers, faced with a shortage of semiconductor chips that’s slowing manufacturing, are selling most of their cars to dealerships and retail customers rather than to rental companies, Chesbrough said.
If you’re planning to travel this summer, you’re likely to pay as much per day for a rental car as a hotel room—an unprecedented situation, said industry expert Neil Abrams. One way to minimize expenses is to book early, and stay away from airport locations. “If you have even a glimmer of knowledge or insight into when you’re going to be travelling, book now” to get a better rate, Abrams said. “But be prepared to spend a good amount of money.”