The cost of hiring a car overseas has jumped by more than 100 per cent since pre-pandemic times while a serious supply shortage means many Irish people might struggle to get a rental at any price in the months ahead.
Increased demand, coupled with a chronic shortage of components needed to manufacture cars as well as post-Covid market complications, has driven prices through the roof. And this has meant costs more than double even in destinations that have traditionally been cheap for car hire.
Recent research carried out by consumer groups across Europe suggest that rates in key holiday destinations have climbed by as much as 135 per cent when compared with 2019 as rental firms are finding it difficult – if not impossible – to meet demand in the face of an anticipated surge in leisure travel this summer.
When coronavirus hit in the spring of 2020, the international travel sector ground to a halt, forcing car hire companies worldwide to sell a significant percentage their fleets just to stay afloat.
According to research published last week by French car hire comparison site Carigimi, there was a 40 per cent drop in rental cars on the market between 2020 and 2021.
Production difficulties
While the mass sell-off worked in the short term, it has left companies with a headache as summer 2022 approaches.
They have faced enormous difficulties trying to restock their fleets. This is because of an ongoing semi-conductor shortage which has meant carmakers worldwide have been obliged to slow or halt production of some models.
Carmakers have also steered their business in the direction of individual consumers rather than bulk buying rental firms in order to maximise their profits. In times past rental firms have been able to order vehicles in bulk and avail of substantial discounts but with it becoming a seller’s market they are suddenly the manufacturers’ least attractive market.
According to British consumer group Which? things are now “so bad that at peak periods in 2022, it’s likely that some locations will have no cars to rent at all”.
The price spiral started last summer, although with few Irish people travelling car rental inflation did not attract a great deal of attention in this part of the world. But it is likely to attract considerably more this summer.
“It’s the last-minute bookers, in peak season, who can expect to pay the highest prices,” warned Which? spokesman Guy Hobbs.
“Rental companies have now missed nearly two years of normal-level trading and need to recoup some of their losses” said Mr Hobbs.
“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 per cent 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.
“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,” added Mr Hobbs.
Fears over demand have also prompted many people to book much earlier for summer 2022, with the result that many of the deals that might once have been on the table have already been snapped up.
Irish Times readers’ experience
Irish Times readers have reported huge price spikes in recent weeks.
“I am travelling to Canada in August for a family wedding,” said Michelle McGinley.
“We thought we’d make a bit of a trip out of it, worked out an itinerary, booked the accommodation and left what I thought was the easy but until the end – the car hire.
“In 2018 I booked an SUV for 22 days at a cost of €1,014, starting in San Francisco and dropping it back to Seattle. In budgeting for our 2022 trip I thought I was being prudent in allowing €1,000 for an 11-day trip. Alas, no. The quote I got for an SUV is €2,633. More than double the cost for half the length of time.”
Paul Bermingham is travelling to Orlando for two weeks this summer.
“This is one of those, like many I’m sure, that has been rescheduled from 2020. We paid €549 for our car for the two weeks, my daughter decided she would get a car also and booking now for the same car and same period was €1,250.”
The word Claire McDermott used to describe the hikes was “shocking”. She had a Renault Clio Estate booked for one week in Portugal in August 2020.
“It was booked for €260 in total including local taxes etc. The same car this August is €560!”
