Car rental companies were one of the first travel providers to start seeing a recovery from the pandemic, with leisure demand for car trips – as well as business travelers choosing to drive rather than take the aircraft – starting in the summer of 2020 and continuing through 2021. However, the global shortage of new vehicles due to a shortage of microchips among other supply chain issues has prevented these suppliers from rebuilding their fleets if easily after selling them when Covid-19 first hit, sending car rental prices skyrocketing.
Big players have started expanding their fleets with new cars when they can find them, with used cars and keeping vehicles running for more miles – up to 50,000 miles, for example, versus an average ranging up to 30,000. But that could mean less satisfied business travelers who may be accustomed to higher-end options. In JD Power’s 2021 North America Rental Car Customer Satisfaction Study, customer satisfaction fell 11 points from a year earlier, while average prices increased 58% in during the previous nine months.
During a podcast in May, JD Power’s managing director of travel, hospitality and retail, Michael Taylor, said the company doesn’t see these trends changing until at least 2023. Cars will always be in high demand at higher prices, along with continued staff shortages, longer waits. delays for vehicles and occasional lack of availability, depending on the market. Non-leisure destinations are beginning to see prices stabilize. This situation lends itself to travel buyers to implement service level agreements.
As with other segments, such as hotels and airlines, car rental providers are not as willing to renew corporate contracts as they have been in recent years, so travel buyers need to prepare for negotiations with destination and volume data. Hertz, which emerged from bankruptcy less than a year ago, noted on an earnings call in February that its bankruptcy allowed the company to cut unprofitable corporate contracts and renegotiate the remains, to their advantage.