Let’s address the elephant in the room shall we?
Car rental prices in 2021 are higher than you’ve been used to over the past few years. Before we jump to conclusions about car rental companies getting greedy, it’s a case of survival for many. 2020 saw unprecedented losses in the travel industry as a whole and of course car rental is a part of that, but there’s more to it than simply needing to recoup costs.
Fewer vehicles
Of course with increased demand, availability decreases and pricing has to change to reflect that. There are more factors at play here also as a result of the COVID-19 pandemic (we wish we didn’t have to bring it up again but we can’t ignore it).
Many companies had to reduce fleet sizes to minimise losses over the course of the pandemic, and this year they might not have the cash to purchase more vehicles, so they’re stuck with much less stock than normal years.
The other factor that stems from the pandemic is companies that do have enough reserves to replenish fleets cannot obtain the vehicles due to a global shortage of new vehicles. This can be traced to factory closures, raw material shortages and microchip shortages.
All of these factors add up to rental companies needing their fleets to work harder for them this year than any year before. Each vehicle needs to bring in more revenue to cover the staff needed due to the increased demand.
Higher demand
With all of us being stuck inside for 18 months and unable to travel, there is a huge amount of pent up demand. If you add to this the UK’s traffic light system, there will be surges of demand as countries get added or removed from the Green List. According to Google Trends, once Portugal was added to the UK Green List in May 2021, searches for car rental in Portugal shot up 900%.
Likewise, when it was announced that fully vaccinated UK residents don’t have to quarantine when returning from the Amber List, that demand grew 700% again. We all want to go on holiday and we don’t blame you one bit.
Recouping losses
We mentioned at the start of this article that increased prices are not all about recouping the losses from the past 18 months but it’s still a huge factor. Car rental companies have missed 18 months of trading while likely still having the burden of vehicle storage costs, wages, office bills amongst other fixed costs.
Sure, some massive corporations would be able to write off a year of non-trading but some rental companies we work with are family businesses. Without recouping at least some losses from 2020, they might not be trading at all in 2022. And then with less competition, prices are likely to rise again!
Cheap car rental
We’ve been over why cheap car rental is not a good idea many many times, customers get stung for extra insurance, fraudulent damages charges and who knows what else. At the time of writing, a 1 week rental in Portugal will cost £25 per day. Some of the less legitimate companies may be charging £5 per day. The thing to bear in mind here is why? If this was your own car, would you let a complete stranger rent it for £5 per day?
Car rental in 2021 has had a double, triple if not quadruple whammy that affects pricing. Prices are roughly 15% more in 2021 compared with 2019 for instance, but we’re seeing customers travel for longer. 1 extra day on a week-long holiday is a 14% longer stay, so prices might not be as high as you first thought.
disclaimer: please don’t take your rental car this close to elephants…
