GREENVILLE, NC (Stacker.com) – Prior to the global health crisis, the car rental industry was enjoying a steady and successful ascent with more people renting vehicles than in previous years. The pandemic, however, has decimated much of the travel industry, including the rental car market. Rental car operators were forced to sell large parts of their fleet and Hertz, one of the biggest companies for decades, had to declare bankruptcy.
However, once travel bans and lockdowns were lifted, car rental companies faced a new problem: people were starting to hit the road again but businesses no longer had enough vehicles to keep up with demand. The standard rules for traveling, such as leaving early and make reservations even earlier— became truer than ever as people rushed to leave the confines of their homes to queue for hours just to get their rental car.
To see how much COVID-19 has changed the car rental industry over the past year, RateGenius investigated the current state of the car rental industry and its dramatic resurgence.
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The number of users fell by 61%
With the implementation of lockdowns, the number of car rentals in the United States has dropped significantly. In 2020, only 17.3 million cars were rented. This is a stark contrast to the 44.5 million vehicles leased the previous year. These figures were based on statistics from car rental companies such as Sixt, Hertz and Budget Car Rental. In 2021, car rental rates almost doubled to 29.2 million, although this is still far from pre-COVID-19 figures. The car rental industry is expected to not only recover, but beat 2019 rental figures with estimates at 46.8 million in 2024 and 49.2 million by 2025.
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Industry revenues have plummeted
Due to sharp and relentless travel cuts, the car rental industry has suffered a significant drop in revenue. This resulted in tens of thousands of layoffs across the industry. In 2019, companies made $11.8 billion in revenue by the end of the year, according to the United States Census Bureau. However, as the pandemic limited people’s ability to travel, earnings were not estimated by the Census Bureau until mid-2020. More people started traveling in 2021 and revenues started to pick up, hitting $15.5 billion by mid-year.
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Loss of nearly 40,000 industrial jobs in 2020
A loss of income in the car rental industry has cost thousands of workers their jobs. Almost 40,000 jobs have been eliminated in 2020, following a steady increase in jobs in the industry from 2018 to 2019. This matches the experience of many other labor markets in the United States during the COVID-19 pandemic. The US Bureau of Labor Statistics called the number of jobs lost in 2020 “unprecedented”.
In April 2020, employment fell by 20.7 millionthe largest decline since the BLS began the Current Employment Statistics Survey in 1939. As of May 2021, there were approximately 19,400 people employed in the car rental sector, an increase of 12.1% compared to May 2020.
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To recover money, rental companies sold fleets of cars
To recoup their losses, many car rental companies have sold large portions of their fleet. The main car rental operators sold more than 770,000 vehicles. To put that into perspective, 1 in 3 cars that were previously leased by these companies have been purged from service. After bankruptcy filing in May 2020, Hertz retired 198,000 vehicles from its fleet of 650,000 cars.
However, this tactic later put many car rental agencies in another tough spot once the market started to reopen, and operators struggled to get enough vehicles to meet customer demand. .
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When the lockdown was lifted, driving felt ‘safer’ than flying
Even after the lockdowns were lifted, many travelers felt much safer driving than flying. This has been reinforced by the opinions of some medical experts. “If you have to and can afford it, I think traveling by car is the safest option right now, in part because you’re not traveling with another person whose risk of infection may be unknown,” Chris Hendel, medical researcher for the USC Gehr Family Center for Health Systems Science and Innovation, said Conde Nast Traveler in August 2020.
Car travelers could more easily avoid large groups of people; however, medical experts have warned travelers not to stop too often during their car journeys. Car rental companies like Business also committed to following Centers for Disease Control and Prevention cleaning guidelines, which included thorough cleaning of each vehicle between uses. In Enterprise’s case, the company began including Clorox disinfectant wipes in every vehicle.
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The vehicles were missing
With a combined shortage of vehicles and semiconductor microchipsoperators were struggling to maintain rental demand at the end of 2021. The shortage of semiconductor microchips has been particularly difficult for the automotive production industry, creating a lack of inventory for car rental agencies cars.
For example, Hertz generally increased its fleet size and number of employees during the second and third quarters. “The continuing shortage of semiconductor microchip manufacturing has impacted our ability to secure sufficient supply of new vehicles,” the company said in a filing with the Securities and Exchange Commission. Unfortunately, the shortage meant that available rentals were also costing customers more.
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Wait times have increased dramatically
When passengers felt safe to get back on the road, wait times for a rental car were long. In one case, a Massachusetts woman told the Washington Post she waited two and a half hours before receiving her rental car at Louis Armstrong International Airport in New Orleans. She stood in line for an hour just for service, but that wasn’t the worst part. There was another 90 minutes of waiting before she received the rental vehicle.
Kayak, an online travel booking site, recommends travelers book their rental car one to three months in advance, especially if people plan to travel during peak months.
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Rental prices have skyrocketed
Because rental companies struggled to keep up with demand, rental car rates skyrocketed once people started traveling again. “Demand has come back much faster than I think anyone expected, especially on the leisure side,” said Neil Abrams, a former Hertz executive. New York Times.
As of April 2020, rental vehicles cost approximately $102. By May 2020, the amount had fallen 23% below pre-pandemic prices. In July 2021, prices catapulted to over $258. The last time the price was this high was in August 2009, at $242.
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People were looking for creative alternatives to standard vehicles
To circumvent the high prices, long wait times and rental car shortages, people have started to get creative. Some used ride apps, like Uber and Lyft. Some chose to use public transport systems such as buses, trains or subways.
Meanwhile, others have sought out car-sharing apps like Turo, which allows users to borrow a vehicle from a private car owner rather than a commercial company. A few people thinking outside the box have even used moving trucks as transportation. By rent a U-Haul vehicle, travelers could avoid certain costs, in particular because of the age of the driver.
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The rise of car rental apps
One of the bright sides of the ups and downs the automotive industry has had in recent years is the development of new technologies. Car rental apps are increasingly popular as travelers look for ways to cut costs and seek alternatives to traditional options.
These apps also allow travelers to rent from locations other than airports, which are prone to long wait times and busy crowds. Apps can not only streamline the process for travelers, but also provide more flexibility. They also offer an option for frequent drivers who don’t necessarily want to own a car. This story originally appeared on RateGenius and was produced and distributed in partnership with Stacker Studio.