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How to navigate through the rental car shortage

July 26, 2021, 6:00 PM UTC

Peculiar things occurred in the global rental car space over the past six months leaving travelers arranging trips around access to a vehicle, succumbing to incredible price hikes, or even renting U-Haul vans to cruise the Hawaiian islands. While booking a car might typically be an afterthought in the planning process, it is now becoming the thing that determines where and when to go. The industry, like many others, grappled with shutdowns and lack of travel in 2020. Now that people are touring once again, rental companies are struggling to meet the demand.

“Rental car companies—largely consolidated and private equity-backed—made swift financial moves to mitigate the pandemic, including selling large portions of their fleets as demand plummeted,” says Mark Granahan, co-founder and CEO of iDEAL Semiconductor. Hertz Global Holdings, for one, filed for Chapter 11 in May 2020 to financially structure among COVID’s sudden hault and cancellations of reservations.

The other issue is a shortage of semiconductor chips in the car manufacturing supply chain. “As the companies returned to the market to buy new cars, a shortage of key semiconductors slowed automotive production lines restricting inventory and driving up the price of available vehicles,” he says.

The use of semiconductors across all industries is increasing as more products become “smart” and interconnected. For example, in cars, these chips are used for autonomous features, rearview cameras, brake sensors, and essentially anything that requires data input or output. During the pandemic, production of the semiconductors intensified because, as Granahan describes, “factories shifted production lines to support chips used in information technology products to prioritize personal and work electronics, therefore the capacity for automotive was reduced.” When COVID-19 cases started to fall this spring, and state restrictions loosened, demand for rentals returned quickly, quicker than semiconductors’ return to car manufacturers.

Due to these shortages, Quantum Metric—a leading company in continuous product design that uses analytics to improve site experiences and conversions—is seeing increased digital customer frustration as more people rush to make travel plans and face out-of-stock moments. “After a decline during the pandemic when people weren’t traveling, so-called ‘rage clicking’ and ‘possible frustration’ activity appears to be making a comeback,” says Mario Ciabarra, founder and CEO of Quantum Metric. “As a result, travel brands are not only dealing with more customers but potentially more frustrated customers.”

In a statement sent from Hertz, who recently announced its completiion of the Chapter 11 restructuring process, is actively adding vehicles nationwide amid the microchip shortage. Yet, they anticipate demand for car rentals to be strong throughout and beyond the summer, especially in popular tourism destinations. In a similar statement, Enterprise Holdings also expects the same demand with increases in the length of rentals and demand for specialty vehicles such as vans, pick-up trucks, convertibles, and large SUVs.

How to plan

According to Granahan, semiconductors are highly complex, are costly, and take years to launch, so it is a two-to-four-year process to react to a situation like this. In the meantime, Holly Hurley, owner of The Hollyday, a Virtuoso travel agency, who is on the constant vehicle hunt for her clients has a few tips.

Plan ahead

The entire travel industry is seeing a spike in bookings, which leads to the risk that last-minute rentals—whether it’s a hotel room or car—may not be available. So, if you’re searching destinations that require a vehicle to wander about, plan ahead and consider making the rental car your first decision.

Seek low demand locations

Look at neighborhood car rental locations that typically have more availability when airport volumes are high. “Look beyond the airport locations even if it’s a little out of the way because you have a better chance,” suggests Hurley. “Airports run out first because everybody goes there to book. “

Book through boutique companies

Booking travel through a travel advisor can help alleviate the stress of the car search. “We have relationships with more boutique rental car companies that might not show up on a just general Google search,” Hurley says. “They tend to have more availability even if they have smaller inventory because they’re not so mass market.”

Private transfers

Hurley says that if all else fails and budget allows, travelers need to get creative and consider arranging for private transfers. In some cases, this route is now comparable to the prices rental car companies are charging. “It depends on the itinerary and where exactly the traveler is driving, but that can be an option in some cases.”

Turo

Available in 5,500 cities in the U.S., Canada, and U.K, Turo is the Airbnb of cars, where users can rent directly from car owners. The owners set prices, and cars are insured for up to $750,000. (Los Angeles has higher liability coverage.) So if the city you’re traveling to has Turo cars, it’s worth a look.

Travel planning is murky right now. Companies are also struggling to navigate the bounce back, and Ciabarra reminds all of us to be patient, especially with customer service employees.

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