As vaccine levels continue to rise, many Americans are considering more extensive travel plans for the first time in over a year, and they’re facing a dramatically shifted travel industry, particularly within the rental car sector.
If you’ve seen the warnings of a “rental car apocalypse” and are wondering how you can keep your fleet ahead of the curve, then you’re in the right place.
What is the Rental Car Apocalypse?
Several factors are contributing to the rise of rental car prices for consumers. Chief among them is the significant decline in rental car supply, headlined by Hertz filing for bankruptcy. This move led to a massive defleeting effort, selling off most of its 500,000 vehicle inventory to pay off hundreds of millions in debt. But Hertz wasn’t alone: Avis Budget Group sold more than 22,000 vehicles to consumers in 2020, and Enterprise relocated more vehicles to non-airport locations.
Even for companies like Enterprise that experienced a swift rebound by the end of 2020, car availability remains impacted by travelers who rent vehicles for more extended periods. According to Avis Budget Group CEO Joe Ferraro, the shift in rental patterns leads to some customers keeping their rentals “almost 80 percent longer than they did in the previous year.”
Beyond these industry-specific issues lies a looming threat for all technology-adjacent companies: the ongoing semiconductor shortage. What started as an automaker issue has expanded to a potential crisis for consumer electronics due to a surge in demand during the pandemic. The automotive industry buys about $37 billion worth of semiconductor chips on average, and the production delays lead to fewer new vehicles with more expensive price tags.
Ultimately, this trickles down to car-rental companies looking to bolster their fleet in response to consumer demand but can’t afford to pay full price for new models.
How Traveling Habits are Impacting Demand
Following a long winter of decreased travel, both driving and flying trends are rising to their highest levels in the past year. Apple's Mobility Trends has reported a gradual rise in driving, which is back to levels last since September and October - the tail-end of a road-trip-heavy summer.
Flying, on the other hand, is experiencing what feels like a return to normalcy. After March 16th, 2020, there were only 12 days with more than 1 million travelers at TSA checkpoints. This year, we’ve already surpassed that, and only five days of March fell below 1 million travelers.
These two trends are projected to intersect this summer, with long-term leisure rentals persisting despite more people feeling comfortable flying and renting a car locally. The surge in rental demand inevitably leads to skyrocketing prices, which leads to customers being priced out and forced to avoid car rentals. In some states and cities, the climb in prices has already begun, with no signs of slowing down as warmer weather approaches.
Staying Ahead of Consumer Demand with Spiffy
If you’ve found that your fleet demand has overtaken your current supply, then it’s even more critical to leverage Spiffy for your preventative maintenance services. We pride ourselves on being easily integrated with existing billing and logistics systems, which expedites service payments and, ultimately, your vehicles’ downtime - all as a part of our Fleet Management as a Service model.
The best part about our services is that they’re mobile and flexible to your needs, so you can address maintenance needs without chewing up valuable time. If your fleet employs a team of mechanics, we’re here to free up their time to focus on more advanced issues and services. We even work nights and weekends so you can release holds faster and drive utilization with safely serviced vehicles.
If you’re interested in seeing what our professional technicians can do for your fleet, then don’t hesitate to reach out to us directly. A member of our Fleet Account Management team will follow up to help you and your fleet get started towards convenient mobile maintenance!
Posted in Fleet