Car Rental Costs Impacting Relocation Budgets
Current car rental costs remain far above pre-pandemic prices with no relief in sight for the foreseeable future due to consumer demand and vehicle availability. This is directly impacting relocation services and global mobility travel budgets.
Stubbornly High Costs
Airfare and lodging prices are still near all-time highs with flights five percent more expensive than in May 2019. Hotels are up 15 percent over the same period, according to a May 2023 report from the Bureau of Labor Statistics (BLS). Yet, when estimating talent mobility travel budgets for home finding and temporary living benefits, renting car costs may be the most surprisingly high factor.
The typical cost of renting a car in the U.S. increased 48 percent since May 2019, according to data from the BLS, so a rental that was $100 per day four years ago would now cost almost $150 per day.
It’s been two years since the initial price rise in the spring of 2021 and what some have called “the rental car apocalypse”, so why does this situation persist today?
Supply, Demand and Profits
Some say the reason prices have soared is simple:
- Supply
- Demand
- Record profits
Higher car prices severely impacted supply: rental car companies couldn't stock their fleets as fast as in the past due to supply chain issues and microchip shortages. Though fleet inventories finally grew again in 2022, they still have a long recovery to fulfill pent-up demand after companies sold off massive portions of their vehicle inventories to offset bleak demand during the pandemic. Consider that the Avis Budget Group alone sold 250,000 vehicles in 2021.
After the pandemic, demand skyrocketed as more people travelled in general, tourism activity and in-person business trips have approached pre-pandemic.
Finally, there was the issue of profits: some rental car companies had their best profit and revenue years and seek to make up for the lost years of the pandemic. Consumers continue to show a willingness to pay more to get around, so they are not inclined to reduce costs soon with continued high consumer demand.
Relocation Impact and Options
While the auto rental market may seem a small piece of a complex permanent move or international assignment, consider the times relocating employees / families may need to rent a car:
- For orientation /home finding trips to the destination to explore the new community
- When vehicles are needed at the departure location while relocating families’ cars are also being shipped to the destination
- When individuals inbound from another country may not be able to purchase an auto upon arrival in the destination
To contain costs, NEI Global Relocation Account Executives proactively guide relocating families in coordinating all schedules to minimize additional costs associated with such waiting periods.
Further, to make the best of the personal or professional travel situation, one might consider the following suggestions by NerdWallet to find available vehicles at the lowest prices:
Consider ways to avoid driving altogether. Public transportation, especially in large cities, can significantly reduce the cost of a trip.
- Check out alternatives to traditional rental car companies. Turo, Getaround and Audi on demand all offer different pricing and rental models, which could save money.
- Make smart shopping choices. Not all rental car companies have the same prices, nor do all locations. For example, renting a car at the airport is 26 percent more expensive than a downtown location, according to a NerdWallet analysis of 360 rental car reservations to better understand the cheapest ways to rent.
Among the rental car companies in the analysis, Enterprise was often the cheapest, while National was often the most expensive. It also found that last minute rentals are typically cheaper than those booked months in advance, and one may almost always save by booking at an off-site rental car location versus at the airport.
NerdWallet also recommends using a search engine that compares several rental car companies to obtain the best rate. However, make sure the final price includes all taxes, fees, and insurance costs needed.
Last, but not least, don’t over-pay for coverage that might already be provided through your credit card benefits.
Freedom to Get Around
It is believed rental car prices might come down later this year or early next. However, we’ve heard this before and statistics regularly show people are traveling for pleasure and business today more than ever and making up for lost travel opportunities due to the pandemic.
Renting a car can be a rewarding experience – allowing for independence and freedom – but stress and relocation costs can be minimized with proactive awareness. NEI consistently works with our clients to discuss the most cost-effective options available.
If you would like to discuss this or other relocation / travel policy trends or cost-saving solutions, please reach out to your NEI representative.
Car Rental Costs Impacting Relocation Budgets
Current car rental costs remain far above pre-pandemic prices with no relief in sight for the foreseeable future due to consumer demand and vehicle availability. This is directly impacting relocation services and global mobility travel budgets.
Stubbornly High Costs
Airfare and lodging prices are still near all-time highs with flights five percent more expensive than in May 2019. Hotels are up 15 percent over the same period, according to a May 2023 report from the Bureau of Labor Statistics (BLS). Yet, when estimating talent mobility travel budgets for home finding and temporary living benefits, renting car costs may be the most surprisingly high factor.
The typical cost of renting a car in the U.S. increased 48 percent since May 2019, according to data from the BLS, so a rental that was $100 per day four years ago would now cost almost $150 per day.
It’s been two years since the initial price rise in the spring of 2021 and what some have called “the rental car apocalypse”, so why does this situation persist today?
Supply, Demand and Profits
Some say the reason prices have soared is simple:
- Supply
- Demand
- Record profits
Higher car prices severely impacted supply: rental car companies couldn't stock their fleets as fast as in the past due to supply chain issues and microchip shortages. Though fleet inventories finally grew again in 2022, they still have a long recovery to fulfill pent-up demand after companies sold off massive portions of their vehicle inventories to offset bleak demand during the pandemic. Consider that the Avis Budget Group alone sold 250,000 vehicles in 2021.
After the pandemic, demand skyrocketed as more people travelled in general, tourism activity and in-person business trips have approached pre-pandemic.
Finally, there was the issue of profits: some rental car companies had their best profit and revenue years and seek to make up for the lost years of the pandemic. Consumers continue to show a willingness to pay more to get around, so they are not inclined to reduce costs soon with continued high consumer demand.
Relocation Impact and Options
While the auto rental market may seem a small piece of a complex permanent move or international assignment, consider the times relocating employees / families may need to rent a car:
- For orientation /home finding trips to the destination to explore the new community
- When vehicles are needed at the departure location while relocating families’ cars are also being shipped to the destination
- When individuals inbound from another country may not be able to purchase an auto upon arrival in the destination
To contain costs, NEI Global Relocation Account Executives proactively guide relocating families in coordinating all schedules to minimize additional costs associated with such waiting periods.
Further, to make the best of the personal or professional travel situation, one might consider the following suggestions by NerdWallet to find available vehicles at the lowest prices:
Consider ways to avoid driving altogether. Public transportation, especially in large cities, can significantly reduce the cost of a trip.
- Check out alternatives to traditional rental car companies. Turo, Getaround and Audi on demand all offer different pricing and rental models, which could save money.
- Make smart shopping choices. Not all rental car companies have the same prices, nor do all locations. For example, renting a car at the airport is 26 percent more expensive than a downtown location, according to a NerdWallet analysis of 360 rental car reservations to better understand the cheapest ways to rent.
Among the rental car companies in the analysis, Enterprise was often the cheapest, while National was often the most expensive. It also found that last minute rentals are typically cheaper than those booked months in advance, and one may almost always save by booking at an off-site rental car location versus at the airport.
NerdWallet also recommends using a search engine that compares several rental car companies to obtain the best rate. However, make sure the final price includes all taxes, fees, and insurance costs needed.
Last, but not least, don’t over-pay for coverage that might already be provided through your credit card benefits.
Freedom to Get Around
It is believed rental car prices might come down later this year or early next. However, we’ve heard this before and statistics regularly show people are traveling for pleasure and business today more than ever and making up for lost travel opportunities due to the pandemic.
Renting a car can be a rewarding experience – allowing for independence and freedom – but stress and relocation costs can be minimized with proactive awareness. NEI consistently works with our clients to discuss the most cost-effective options available.
If you would like to discuss this or other relocation / travel policy trends or cost-saving solutions, please reach out to your NEI representative.
