Thanksgiving travelers are paying 75% more for car rentals this week

Those looking to rent a car for the holidays this year may be in for a sticker shock.

Travel site Kayak reports that the average cost of rental cars has increased by 75 percent from 2019 and by 66 percent from 2020.

Jonathan Weinberg, the founder and CEO of Autoslash.com, also said that the average price for a rental car across the country is about $100 more per day than for a car rental in 2019.

In high-demand markets, such as New York, renters could pay as much as $300 a day to rent a car, he told the New York Post, as AAA expects 48.3 million people to drive for the Thanksgiving holiday and 4.2 million people to fly.

And a study of Finance Buzz found that the average price of renting a sedan in New York City is $261.17 per day, while the average price of an SUV in the city is $392.30.

The higher prices come as rental car companies struggle to meet pent-up travel demand after selling much of their inventory during the pandemic.

To compound the problem, Americans are faced with skyrocketing gas prices and supply chain issues that slow down new car production.

Those renting cars for Thanksgiving may experience sticker shock as the average cost of rental cars is up 75 percent from 2019 and 66 percent from 2020

The high prices come amid a global supply chain crisis that has slowed new car production

The high prices come amid a global supply chain crisis that has slowed new car production

Many rental car companies sold much of their inventory in 2020 to cut costs as COVID-19-related travel restrictions kept Americans at home.

They then faced a crisis as the economy bounced back in the spring and summer, as they had little demand to meet the increased demand for travel, the Washington Post reports.

And while rental car companies have brought in more vehicles in recent months, Chicago Tribune reports, they still can’t meet demand for vacation travel, as millions of Americans are expected to hit the road to visit loved ones — in many cases for the first time since the pandemic began.

AVIS Budget Group had approximately 434,400 vehicles in its fleet during the three-month period ended Sept. 30, a 20 percent increase from the same period last year, the Tribune reports, after purchasing about $8 billion in new cars this year. have issued.

Hertz, meanwhile, had 34 percent fewer vehicles in its fleet over the three-month period, compared to the number in 2019.

“While we are making new vehicles available every month, we are not seeing the supply needed to fully replenish and rotate the fleet,” CFO Kenny Cheung said in a earnings call earlier this month.

The company ordered 100,000 Tesla electric vehicles, which are expected to be delivered until the end of 2022.

And in a statement, Enterprise Holdings spokeswoman Lisa Martini said the company — which includes Enterprise, National and Alamo car rentals — is seeing increasing demand across the country.

“We expect strong demand in the coming months, including the holiday season,” she said in October. “Our teams continue to work hard to meet the increasing demand for leisure travel and to support customers’ broader transportation needs.”

But many rental car companies still don’t have enough supply to meet holiday season demand, with Todd Connors, a co-owner of Rent-a-Relic in California’s East Bay, offering the Mercury News that car rental companies are already running out of cars before Christmas.

The problem is compounded by a global shortage of semiconductors.

All modern cars are built with onboard microchips to power everything from window motors to navigation systems. But when automakers had to close their factories last year, they canceled orders for the semiconductors containing microchip processors.

When the economy returned, they were unable to buy the parts they needed to meet the demand for new cars.

“Right now, new car dealers only have about 20 percent of the inventory they’re used to in a normal year,” Ivan Drury, the senior manager of Insight at Edmund’s, told the Post.

‘So we’ve even seen rental companies [who] if they want to buy X number of units, they can’t even get it delivered.’

AAA expects 48.3 million people to drive for the Thanksgiving holiday

AAA expects 48.3 million people to drive for the Thanksgiving holiday

The scene in Denver when people drove to their loved ones for Thanksgiving

The scene in Denver when people drove to their loved ones for Thanksgiving

Rents are now expected to be highest in major cities.

According to Finance Buzz, the New York City metropolitan area will be the most expensive place to rent a car this holiday season.

It predicts that the daily cost of an economy car will cost an average of $261.17 per day in New York City, while prices will be similar in nearby Newark, New Jersey and White Plains, New York.

And those who want an SUV to fit the whole family will find the highest prices in Newark, where they average $397.45 per day, while in New York City they average $392.30 per day, and in White Plains, an SUV costs an average of $355.28 per day.

In addition to increased demand to visit the New York metropolitan area during the holiday season, prices may rise as there are public transportation options.

“One factor in rental car pricing is the number of readily available public transportation options a city has to and from the airport,” explains Julie Anne Bausch, editor-in-chief of NPR’s Car Talk.

“If a city has trams and trains that go to and from the airport several times a day, car rental companies will have a harder time keeping their prices low.”

Meanwhile, gas prices across the country have risen steadily in recent months.

They finally leveled off last week, averaging $3.41 a gallon nationwide on Friday, according to the American Automobile Association. That’s seven cents higher than a year ago, USA today reports, meaning Americans spend an average of $19.35 more every time they fill up their 15-gallon car.

However, prices are higher in certain areas, with California seeing gas prices at $4.64 a gallon — more than $1.50 higher than last year, according to Mercury News, while prices in the San Francisco Bay Area are nearly $5 a gallon. be gallons.

On Wednesday, President Biden asked regulators to investigate oil and gas companies that allegedly inflated their prices unjustly.

In his letter to FTC Commissioner Linda Khan, he asked the agency to investigate whether “illegal behavior is costing families at the pump,” noting that there is an “inexplicable gap” in the price of unfinished gasoline and the price consumers pay. for the final Product.

Gasoline prices at the pump remain high, even as the costs of oil and gas companies fall.

But the industry’s lobbying association, the American Petroleum Institute, criticized Biden for the move.

Frank Macchiarola, the senior vice president of policy, economics and regulation, called the president’s push for an investigation a “distraction from lingering market problems,” USA Today reports, claiming that “ill-considered government decisions” are exacerbating the problem.

“Instead of launching investigations on markets that are regulated and monitored closely on a daily basis, or requesting OPEC to increase supply, we should encourage the safe and responsible development of American-produced oil and natural gas,” he said. .

Gas prices have also risen in recent months, leveling off last week at a national average of $3.41 per gallon

Gas prices have also risen in recent months, leveling off last week at a national average of $3.41 per gallon

Prices are even higher in California, where they average $4.64 a gallon

Prices are even higher in California, where they average $4.64 a gallon

The president blames rising gasoline prices on “Russia or OPEC’s refusal to pump more oil.”

OPEC members produce about 40 percent of the world’s oil. OPEC has coordinated manufacturing decisions with other suppliers, including Russia, as part of a larger group called OPEC+.

To address the issue, the president announced Tuesday that the US will release 50 million barrels of crude oil (half a day’s worth of global crude oil consumption) from its Strategic Petroleum Reserve.

“I also want to briefly address the one myth about inflationary gas prices,” he said in his public announcement of the policy. ‘They are not due to environmental measures. My effort to combat climate change is not raising the gas price…’

“The price of petrol in the wholesale market has fallen by about 10 percent in recent weeks, but the price at the pump has not risen a cent,” he added.

“In other words, gas suppliers pay less and earn a lot more, and they don’t seem to pass that on to consumers at the pump…instead, companies put the difference as profit. That is unacceptable.’

In response to the official announcement on Monday, WTI crude on the NYMEX was trading 2.3 percent higher from a five-session high of $78.50 a barrel.

The high cost of driving for the holidays this year

A wave of people traveling this holiday season has skyrocketed travel-related costs, with travel site Kayak reporting that the average cost of rental cars is up 75 percent from 2019 and 66 percent from 2020.

Jonathan Weinberg, the founder and CEO of Autoslash.com said consumers spend as much as $300 a day on a rental car in New York, and the average is about $100 more a day than it was to rent a car in 2019. .

Experts attribute the high cost to a shortage of rental cars and a supply chain shortage of the computer chips used in modern cars.

Automakers were also forced to shut down production during the coronavirus pandemic, causing the value of cars, which many were selling, to fall.

Meanwhile, fuel costs have risen in recent months and stabilized at $3.41 per gallon on Friday.

That’s seven cents more than around the same time last year, meaning Americans spend an average of $19.35 more every time they fill up their 15-gallon car.

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