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Around this time last year, rental car companies found themselves selling off a fair amount of their inventory as the COVID-19 pandemic devastated the travel industry. With travel starting to bounce back, rental car companies now find themselves with a new problem - a shortage of vehicles to rent. Usually, they would turn to automakers and buy up a batch of new cars to shore up inventory. But the on-going semiconductor shortage has automakers cutting back on production, and causing rental companies to look at used cars. “You would never go into auction to buy routine sedans and SUVs. These are special circumstances. There is a shortage of cars,” said Maryann Keller, an independent consultant. Bloomberg reports that rental car companies do buy a small amount of used cars in the event of an sudden rise in demand, but not to fully outfit their fleet. New car production has been hampered since last year as plants were shut down to stop the spread of the COVID-19 virus. Production was starting to climb back up later in the year only to be hampered again by another crisis, the lack of semiconductors and chips needed for various systems. In their first-quarter earnings call, Ford reported production was down 17 percent and could fall as much as 50 percent in the second quarter. Other automakers are making similar statements. “Our fleet acquisition team is working hard to secure additional vehicles -- both new and low-mileage used vehicles -- through all channels to meet the ongoing increase in demand.Overall, though, both new and used car inventory remain low. Our teams will continue to do everything we can to help customers with their transportation needs,” Enterprise spokeswoman Lisa Martini said via email. There is a silver lining for rental car companies as they'll be able to charge higher rates as many people begin to take vacations after spending a lot of time at home. For example, the average rate at Avis increased 3 percent in the fourth quarter, to $59.43 a day according to Hamzah Mazari, an analyst with Jefferies & Co. He expects that number to rise to $60.00 when Avis reports their first quarter results. Source: Bloomberg (Subscription Required) -
Around this time last year, rental car companies found themselves selling off a fair amount of their inventory as the COVID-19 pandemic devastated the travel industry. With travel starting to bounce back, rental car companies now find themselves with a new problem - a shortage of vehicles to rent. Usually, they would turn to automakers and buy up a batch of new cars to shore up inventory. But the on-going semiconductor shortage has automakers cutting back on production, and causing rental companies to look at used cars. “You would never go into auction to buy routine sedans and SUVs. These are special circumstances. There is a shortage of cars,” said Maryann Keller, an independent consultant. Bloomberg reports that rental car companies do buy a small amount of used cars in the event of an sudden rise in demand, but not to fully outfit their fleet. New car production has been hampered since last year as plants were shut down to stop the spread of the COVID-19 virus. Production was starting to climb back up later in the year only to be hampered again by another crisis, the lack of semiconductors and chips needed for various systems. In their first-quarter earnings call, Ford reported production was down 17 percent and could fall as much as 50 percent in the second quarter. Other automakers are making similar statements. “Our fleet acquisition team is working hard to secure additional vehicles -- both new and low-mileage used vehicles -- through all channels to meet the ongoing increase in demand.Overall, though, both new and used car inventory remain low. Our teams will continue to do everything we can to help customers with their transportation needs,” Enterprise spokeswoman Lisa Martini said via email. There is a silver lining for rental car companies as they'll be able to charge higher rates as many people begin to take vacations after spending a lot of time at home. For example, the average rate at Avis increased 3 percent in the fourth quarter, to $59.43 a day according to Hamzah Mazari, an analyst with Jefferies & Co. He expects that number to rise to $60.00 when Avis reports their first quarter results. Source: Bloomberg (Subscription Required) View full article -
William Maley Staff Writer - CheersandGears.com October 16, 2013 Range Anxiety. A condition that still plagues electric vehicles. But it isn't limited to prospective customers who are worried about not having enough juice, it has now spread to rental customers. A number of rental car agencies have now started offering electric vehicles. This allows consumers to try an EV. But renters are returning the EVs much sooner and exchanging them for gas vehicle. “People are very keen to try it, but they will switch out of the contract part way through. Range anxiety makes them think they can’t get to a charging station,” said Lee Broughton, head of sustainability at Enterprise. Enterprise data shows that on average, renters trade EVs in 1.6 days into the rental period compared to the 6 to 7 days of a standard gas vehicle. Christopher Agnew, an analyst at MKM Holdings LLC says that a longer range would help renter's range anxiety, especially in places where they don't where they're going. Now you can rent a Tesla Model S if you go to certain place, but expect to pay a pretty penny. MPG Car Rental based out of Venice, CA rents a Model S for $500 per day. To put that in perspective, a Prius Plug-In costs $99 per day. Despite these setbacks, rental car companies say they will keep buying EVs for their fleets. Source: Bloomberg William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster. View full article
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William Maley Staff Writer - CheersandGears.com October 16, 2013 Range Anxiety. A condition that still plagues electric vehicles. But it isn't limited to prospective customers who are worried about not having enough juice, it has now spread to rental customers. A number of rental car agencies have now started offering electric vehicles. This allows consumers to try an EV. But renters are returning the EVs much sooner and exchanging them for gas vehicle. “People are very keen to try it, but they will switch out of the contract part way through. Range anxiety makes them think they can’t get to a charging station,” said Lee Broughton, head of sustainability at Enterprise. Enterprise data shows that on average, renters trade EVs in 1.6 days into the rental period compared to the 6 to 7 days of a standard gas vehicle. Christopher Agnew, an analyst at MKM Holdings LLC says that a longer range would help renter's range anxiety, especially in places where they don't where they're going. Now you can rent a Tesla Model S if you go to certain place, but expect to pay a pretty penny. MPG Car Rental based out of Venice, CA rents a Model S for $500 per day. To put that in perspective, a Prius Plug-In costs $99 per day. Despite these setbacks, rental car companies say they will keep buying EVs for their fleets. Source: Bloomberg William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster.
