Memorial Day: Rental car shortage is hurdle for travelers

Memorial Day weekend is almost here, and if you haven’t already rented a car for your trip, now’s the time.

The U.S. has been suffering from a rental car shortage as more people get vaccinated against the coronavirus and travel picks back up.

When travel was down at the height of the pandemic, rental car companies sold off some of their cars, both to save money when demand was low and as a way to refresh their fleets, according to Paula Twidale, AAA’s senior vice president of travel.

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Typically, rental car companies will sell off some of their fleet and buy new cars to replace them, Twidale told FOX Business. However, another shortage has made that difficult.

"The most severe problem that we're incurring today is the semiconductor shortage," Twidale said.

"Consequently, car companies that normally refresh some of their fleet -- and now they certainly want to do that, because travel has picked up -- they're not able to do that quite readily because the cars are not available," Twidale added later.

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According to Twidale, the rental car shortage is causing "havoc" in warmer locations, such as Florida and Hawaii, causing prices to skyrocket as people are trying to escape the cold. 

In a statement provided to FOX Business, Hertz said that despite the microchip shortage, the rental car company is "working closely with our automotive partners to add new vehicles to our fleet as quickly as possible while also moving vehicles to the areas with highest demand."

However, it doesn’t look like the problems will go away anytime soon, Twidale said. She predicted the rental car shortage could be a problem through the end of the year and maybe even into 2022. 

Both Hertz and Enterprise told FOX Business they anticipate high demand for rental cars at least through summer. 

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The shortage certainly won’t be resolved ahead of Memorial Day weekend, when millions of people plan to hit the roads.

According to estimates from AAA Travel, more than 37 million Americans are expected to travel over the weekend. Of those travelers, 34.4 million are expected to drive, Fox News previously reported.

"Hopefully [people have] made plans for Memorial Day weekend already," Twidale said about rental cars. "They might run into problems if they certainly haven't booked by now. Or … if there is availability, the prices are going to be exorbitant. So it's going to hit them in the purse, as far as the pricing is concerned."

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She went on to say that rental car prices per day for Memorial Day weekend this year have "basically doubled" compared to last year’s per-day prices. Twidale said cars that used to cost $65 or $70 per day last year now cost about $134 a day. 

For people who haven’t already booked their rental cars, Twidale recommends working with a travel agent who can help them find promotions and packages that could save them some money.

Twidale also said people should keep their dates and times flexible and go ahead and pay for their rental cars now, ahead of time. 

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"A lot of opportunities, specifically with rental cars, give you the opportunity to pay now or pay at the counter," Twidale said. "So paying now is usually a little less expensive, they usually give you a break on that rate. So if you're certain you're going, lock into the rate and pay now, because you might as well, you know, save yourself some money and know that you're going to have a car."

She also said not to wait until closer to the weekend for a drop in rates, because it’s not likely to happen.

"If you’re going to look, you need to shop around," Twidale said. "And if you’re finding something, don’t think, oh well, closer is going to be even less expensive. Not true."

"Car rentals are going to be expensive, and they’re going to continue to go up," she added.

With the possibility of high demand and shortages this summer, both Hertz and Enterprise advised customers to book their rental cars as early as possible and to check neighborhood locations, rather than airports to give them a better chance of finding availability. 

This article has been updated to include comments from Hertz and Enterprise.