Holidaymakers face sky-high car hire prices this Easter as rental firms struggle to meet renewed demand.
The average Easter rate for those booking so far in March 2022 is £280 per week, up 135% from the pre pandemic rate of £119 (March 2019). And prices are expected to keep rising.
Some customers have already paid even higher prices, depending on demand in their location. Which? has seen some extraordinary Easter booking prices including:
High prices are the result of an acute shortage of new cars. When Covid hit, car hire companies sold off vehicles to survive. But they've been unable to restock their fleets due to the ongoing semiconductor shortage that has caused car manufacturers to slow or even halt production of new vehicles.
It's so bad that at peak periods in 2022, it's likely that some locations will have no cars to rent at all. Providers reported running out of cars in some locations for February half term, earlier this year.
Prices were already drastically higher last year than pre-pandemic. According to figures from Which? Recommended Provider (WRP), , in 2019 just one in 20 car hire customers paid more than £500 for their car rental. But in 2021, more than a quarter of rentals cost £500 or more.
It's very difficult to estimate how much higher rental rates could rise in 2022, but prices in October 2021 do give us an indication. The combination of October half term and the short window of opportunity to travel between the travel traffic light system being scrapped (4 October) and the arrival of omicron (24 November), caused holiday bookings and demand for car hire to surge.
Average prices rose to more than double their pre-pandemic rate. However, there were marked differences across Europe, with bookings in Portugal nearly triple their 2019 rate - see table below.
|Country/territory||2019 price||2021 price||Price difference||Percentage increase|
Table notes:Average rental rates for popular European destinations with October 2021 booking/pickup across all car categories, provided by Zestcarrental.com
With travel restrictions easing, demand for rental cars from UK holidaymakers could be even higher this summer.
It's the last-minute bookers, in peak season, who can expect to pay the highest prices. Which? has seen eye-watering examples of prices paid by late bookers (those who booked and travelled in August 2021) .
The highest weekly rate was £968 for a VW Polo in Iceland. While car hire in Iceland is comparatively pricey, in 2019 the weekly average was only around £300.
Another outlier was the £949 paid for a 10-day hire of an Opel (Vauxhall) Corsa in Zadar. In 2019 the average cost of a 10-day rental in Croatia was under £250.
The combination of Covid and global car manufacturing shortages has created a perfect storm in the car hire industry.
The pandemic caused a complete collapse of demand for hire cars as overseas travel came to a standstill. Rental companies have now missed nearly two years of normal-level trading and need to recoup some of their losses.
Many kept their head above water by selling off vehicles, helping to manage costs and generate cash. Some fleets were cut as low as 30% of normal levels.
But as demand has slowly returned, car hire companies have had limited financial reserves to restock. And where they have been able to order new vehicles, they've faced waiting times from manufacturers of up to a year caused by factory closures and shortages of raw materials.
The problem is compounded by car manufacturers prioritising individual consumers over car hire companies that tend to order vehicles in bulk at large discounts.
Our relationships with our manufacturing partners remain strong and our Fleet Acquisition team is working hard to secure additional vehicles to meet demand.'
Some companies have even resorted to buying used cars, but because of the global shortages, they've had to pay 'new' prices. And because they haven't been able to renew their fleets (in normal times cars are only kept for two years), car hire companies have been saddled with older fleets that are much more expensive to maintain.
None of these problems is likely to disappear overnight. Car industry figures predict that the semiconductor crisis that is disrupting global car production will continue well into 2022, and even into 2023.
At the moment car rental fleets are small and firms are unable to expand. But even when the manufacturing bottleneck ends, it will take time for car hire companies to rebuild fleets and recoup the losses of the last two years.
With nearly two years of pent-up demand for travel, if this summer sees far fewer restrictions, it is likely that providers will struggle to meet the demand for rental cars.
Make sure you book with a , like in the UK, in the USA, in the Canary Islands, and for bookings worldwide. There are providers that will take advantage of this unusual market to ramp up prices to extortionate leves. But Which? vets both providers and brokers, not just on the customer experience, but also on their pricing transparency and the way they have behaved during the pandemic.