WASHINGTON, D.C. — While the global recession has sent prices plummeting on airfares, hotels and cruises, it is having the opposite effect on rental cars.
In May, the average rate for a weekly airport rental of a compact car booked seven days in advance was $345.99, up a whopping 73% compared with $199.65 for the same month last year, according to the Abrams Consulting Group, based in Purchase, N.Y., which tracks rental rates.
In mid-June, weekly airport rental rates for a compact car averaged $347.44, compared with $210.38 a year ago, a 65% jump. "There's a lot of sticker shock," said Neil Abrams, president of the consulting group. "People don't understand. The economy is caving in around them," he said, adding, "so how is it possible that rates are as high as they are for car rentals?"
The reason is basic supply and demand. Although demand for car rentals is down, by about 15%, said Abrams, rental agencies have cut their fleets by even more, essentially creating their own shortage and jacking up prices.
To trim fleets, companies have been selling cars to the used car market and holding off on buying new ones. That doesn't necessarily mean renters are getting clunkers, but it's not unusual anymore to see a car with 30,000 miles on it. The average age of a rental car is about 11 months, compared with about nine-and-a-half months a year ago, Abrams said.
All of this has changed the booking game for consumers. With many hotel rooms and airline seats empty, travelers have become accustomed to booking trips at the last minute. But with car rentals, that strategy won't work. A procrastinator risks paying an exorbitant rate for the last car on the lot, assuming there is a car left. Many rental agencies in Manhattan, for example, have been sold out for the busy Fourth of July weekend for weeks.
Source: The New York Times