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In the past year, rental car companies have sold more than 400,000 vehicles in the used car market, creating an artificial scarcity. They're now able to jack up prices to pretty much whatever they want. The New York Times Practical Travel columnist Michelle Higgins has the scoop:
In May, the average rate for a weekly airport rental of a compact car booked seven days in advance was $346, up a whopping 73 percent compared with $199.65 for the same month last year, according to the Abrams Consulting Group, based in Purchase, N.Y., which tracks rental rates.
So what is a traveler to do?
• Search beyond the major name companies. Metasearch giant Kayak covers all the major car rental companies along with a broad array of mom-and-pop operations, the latter of which may rent cars for less because they don't spend money on large national marketing efforts. Other travel websites are known to overlook these smaller operations.
• Consider Toyota. You may not realize that many Toyota dealerships also rent cars. Some will even deliver the cars to your hotel for free pick-up. Find a list of dealerships that rent at toyota.com/rental.
• Skip the airport rental car counter and head straight to your hotel. Then rent from a company near your hotel. Rental car locations in downtown and suburban destinations usually charge lower rates than airport rental car counters do. That's partly because airports charge high taxes and fees. In the U.S., concession fees can add between 9 and 11 percent to your bill. In Europe, aiport taxes may add up to 19 percent at major airports, such as Frankfurt, Germany. So to get to your hotel, hop that free hotel shuttle or opt for cheap public transportation. And if you're heading to a hotel in suburban America, consider using a cab to get there and then renting from Enterprise, which will deliver the car to you at the airport and let you drive it back to the airport when you're finished at no charge. Plus, Enterprise covers about 90 percent of the suburban U.S., which is more than the other national chains.
• Try a blind-booking site like Hotwire or Priceline, which offer cars only from a handful of top national chains. Pre-pay your booking, and you'll save up to 40 percent. The catch? If you cancel your trip, you'll be out the money.
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I spend almost 4 times the cost of flying to Florida for the darn car -- the car rentals know we are "stuck" and "stick" it to us in return because in some areas, there is little choice.
Posted By SouthJerseySteve on June 29, 2009, 6:07 PM
Thanks for the Toyota suggestion. We have been looking for a weeklong summer rental (end of July) in SEA and are encountering rates of $68+/per day for a weeklong rental! Talk about sticker shock, its so bad we keep delaying making a reservation. At this point we hope to see some discounts after July 4th.
This has been even more of a shock to us, since this spring we made trips to San Antonio and Portland, where Alamo was offering a $10/day special on the weekends which we took advantage of at both locations - then used public transportation for the remainder of our city visits...
Posted By Iolaire McFadden on June 30, 2009, 9:57 AM
Hi Iolaire,
Thanks for your comment on Budget Travel’s blog.
I would go ahead and book a refundable/cancelable reservation now. (With most major agencies, you can book a reservation without pre-paying.) There’s a chance they’ll sell out, and then you’ll really be in trouble.
You can always cancel if a better deal comes along!
Best,
Sean
Blog editor
Posted By Blog Editor on June 30, 2009, 10:14 AM
this is not a very well researched article.
the amount of cars sold actually is less than what rental car companies used to sell off in a typical year.
the amount of cars bought is why fleets are lower. there is nothing artificial about the scarcity.
for years, the industry had too many cars, and almost all the big companies came close to bankruptcy.
even with the higher prices, i challenge you to find another industry thats based on rental that comes any where close to the actual cost of the item vs what you can rent it for.
i also dont remember any outpouring and outrage when people were renting cars at rates that made the companies lose money. i dont think anyone ever came back and said, "i didnt pay enough for this.."
Posted By bob on June 30, 2009, 2:52 PM
Sean:
Your report of a sell off of cars by rental companies to reduce availability and increase rates surprised me. Is there truth to reports of mergers within the rental industry which also has led to rate increases? If true, which top tier companies (e.g. Hetz & Avis)now own 2nd tier (e.g Alamo & Enterprise)operations and how has that affected pricing?
Your fellow 'Niall Clansman
J. McNeal
Posted By John McNeal on July 2, 2009, 10:40 AM
Hi Bob,
Thanks for posting your comment.
My blog post linked to a New York Times article, which cited many factors for run-up in car rental prices. That reporter found that the supply had shrunk, and that part of that shrinking was due to selling off in the used car market and the other part was that companies have been holding off on buying new ones. I didn't emphasize the "holding off on buying new ones" because the average age of cars has only risen by a couple of months. It's not that substantial of a change, and I think it would mislead people into thinking that the cars are in bad shape.
As you say, for many years there were more rental cars than customers, and that companies lost money. It's understandable that they'd want to boost their pricing power. But what's good for companies is bad for travelers: Rates are much, much higher--more than 60 percent higher, according to the AbramsConsulting.com.
Hi John McNeal,
The most recent merger was this past spring, when Advantage Rent a Car's "remains" were purchased by Hertz.
The trend is driven less by mergers and more by keeping cars on the lots for months longer before buying new ones, and by buying fewer new ones, and by selling off older cars in the used car market in greater numbers.
Thanks and have a Happy Fourth,
Sean O'Neill
Blog editor
Posted By Blog editor on July 2, 2009, 11:50 AM
Based on the comments above, I am not sure about the exact reason for the increase in car rental prices but one thing I know is I do NOT feel sorry for car rental companies if their fleet was larger than the demand in previous years. This is basic economics and not my fault when I could rent a car for 10.00 per day. Now they have gone the opposite way in their understanding of basic supply and demand and have gotten to the point of price gouging. I don't mind a week's rental of 275.00-300.00 with taxes but when my recent inquires into the Boston area produced nothing short of 450.00w/taxes per week for a rental we nixed our trip. I refuse to pay more for a car rental than I am paying for two airline tickets to get to the city. We will be staying closer to home and driving for this year's vacation instead of flying all because of the increase in CAR RENTAL prices. Shame on them... aren't we all supposed to be working together in this economy?
Posted By K. M. on July 2, 2009, 1:35 PM
I fly to LA a few times a year and the car rental prices have more than doubled since I last rented in March of this year. I used to use CarRentals.com Recently I reserved a car from Deluxe Car Rentals. a no thrills company close to LAX. The other day I went the Deluxe web site and found the same car for $100 less!! Lesson learned, goodbye Car Rentals.com
Posted By George White on July 2, 2009, 2:28 PM
Great news, renting a car for Gettysburg PA trip in Sept, darn rates.
No point to rent that Mustang now.
Plain Jane Mustang I mean.
Posted By stephen russell on July 2, 2009, 6:22 PM
There are no car rental bargains in Portland, OR either. In April we paid
$345 including taxes and fees for 2 weeks in a mid-size. Next week the cheapest quoted rate is $750 for the same size car at the same PDX counter. That's 3x our round trip plane fare for 2 to get to PDX! One more reason travel isn't as much fun now.
Posted By KarenE on July 2, 2009, 11:00 PM
In Seattle, I recommend Fox rental cars.........around $10-15 per day, close to airport, they will pick you up, it's a huge savings......
Posted By Seatlle visitor on July 3, 2009, 5:42 PM
Reply to Seatlle visitor: How in the world did you score a car for $10-15 per day from Fox? I just did a rate check at SeaTac for July 14-17 and the cheapest car was a compact for $56.74 per day! August 14-17 gives me an economy for $46.09 per day. Where's the deal here??
Posted By Kobe20009 on July 4, 2009, 1:43 PM
despite recession , not only rental car rates increase , overcharges are done regularly as well as arbitrary charges.
I rented a car with PaylessRentalCar in San Jose' del Cabo(Mexico)for a week in February 2009 for a total cost of US$341 for which I signed a voucher as agreed with the Company,but I was arbitrarily charged US$547 before I signed the voucher paying the final bill , result:US$206 overcharge.
In spite of my many polite emails to Payless customer service and representatives of Payless in San Jose' del Cabo demonstrating the mistake , as now July 2009 I've not been answered or explained and even less recovered the stolen money.BE AWARE OF PAYLESS at least in San Jose' del Cabo , they are either not serious or, I'm sorry to say , they are scammers.
I just rented a pick up 4x4 for two weeks in June 2009 in Santiago(Chile)with National , total cost US$1,368.08 , I signed a voucher at pick-up for US$905.22 and I signed a voucher at drop off for US$462.86 as balance.
In reality in my Bank account I was charged US$905.22 and the same day US$1,448.35 and never charged the US$462.86 , result:US$522.63 OVERCHARGE,WHY?...not only the rates are high,also overcharges and arbitrary charges are skyrocketing.
Max
Posted By Massimo Monti on July 4, 2009, 4:02 PM
Just did a rate check for Enterprise at EWR for Labor Day weekend (Sept 4-7). An economy will run you $54.58/day and a premium a whopping $73.06/day. Be sensible guys, simply do not rent at these outrageous prices. Let's see how much longer these car companies can sustain this gouging if we just use our heads and say no!
Posted By Kobe20009 on July 5, 2009, 12:40 AM
I agree, Hotwire saved me $500 on a week rental car that I was going to book with National. The blind rental car assignment was not bad at all - we got a car through Budget and it all worked out just fine. No glitches in the system.
Posted By Justracy on July 6, 2009, 3:09 AM
I registered online with ALL the car rental companies. You can register for free. I receive special offers periodically from all of them, some good, some not. Also check with your automobile insurance company, sometimes they have discount coupons for various rental car companies. I rec'd a coupon from my insurance company that resulted in me renting a car for a week at the rental company's employee rate. I'm going to LA in October for a month, so I'll be searching for a deal.
Posted By hawaiiwoman on July 7, 2009, 8:54 PM
The Toyota dealership near the SEA airport quoted a weekly rental rate of $164.95 a week tor a 2009 Toyota Corolla, which is extremely good giving today's prices. However they do not sell insurance and require that you have proof of full coverage insurance. We have yet to look into if it is possible to purchase that temporarily (for those of us who do not currently have it as part of our automobile insurance).
Posted By Iolaire McFadden on July 8, 2009, 10:27 AM
The recent purchase of National and Alamo by Enterprise actually has made them by far the largest rental car company. National and Alamo are the airport focused brands while Enterprise actually focuses on local rental. Usually June is the highest rates of the year as rental fleets have yet to increase to summer levels fully and demand begins to pick up. You should not see any large differences in price from last summer.
Posted By John on July 8, 2009, 1:56 PM
I rented a mini van in Portland over Memorial day weekend from National for $50 a day, using discount codes and coupons. A few weeks later I tried to get a full sized car in either Reno or Sacramento and with all the discounts and coupons, the best I could find was $500 for 6 nights. We decided to drive our own car and save on the air AND rental charges. On top of the excessive costs of the cars, the airport fees and taxes are "driving" us away.
Posted By Rrdsg on July 8, 2009, 2:29 PM
Hi Iolaire,
As always, thanks for being such a wonderful, frequent contributor to the Budget Travel community. Glad to hear you’ll be taking a trip soon.
Have you had any luck yet finding insurance?
I don’t own a car, though I do have a license. So when I rent cars, I need to get insurance. I’ve had a good experience with TravelGuard.com, paying about $12 a day (last time was this past spring).
AccessAmerica.com is another company.
Hope that helps?
Regards,
Sean
Blog editor
Posted By Blog Editor on July 9, 2009, 7:11 PM
Sean,
Thank you, we do have an older car, so we just called Gieco and added six months of full coverage for about $60 for six months. But in the end we spent the full amount ~$330/week (with Toyota) to rent a Prius. Since my wife is considering buying one to replace her current 10 year old Honda. So for the price of any other car we get the Prius.
Thanks for the response.
iolaire
PS: Mostly due to reading the blog I recently signed up a subscription to your magazine from one of your emails.....
Posted By Iolaire McFadden on July 10, 2009, 9:20 AM
I didn't know Toyota rented cars!! Thanks for the tip...I'm checking with them now!
Posted By MBall on July 27, 2009, 11:18 AM
The tip on Toyota is very cool!
Those on a budget travel should also check the peer to peer car rental companies, such as the Spagg Network. You can rent cars from private owners in the city where you're going.
Posted By GB on October 3, 2009, 9:48 PM