“The rental car companies simply underestimated the demand” AutoSlash CEO

Kristin Myers discusses how rental car companies are struggling to meet a surge in demand with AutoSlash.com Founder and CEO, Jonathan Weinberg.

Video Transcript

KRISTIN MYERS: And car rental shortages are causing prices to spike as folks are trying to travel and either have to fork over large sums, or they just have to deal with the fact that cars are not available at all. That's all according to data from the discount car rental platform Autoslash. Let's bring in Jonathan Weinberg, founder and CEO of Autoslash.com. Jonathan, it was very interesting when the team said that we were going to have this conversation today because I am going on a trip to Hawaii in two weeks. And I--


KRISTIN MYERS: --discovered that-- well, not so lucky because the car rental prices are, frankly, sky high, incredibly expensive. Is that happening everywhere? How bad is it right now for folks that are trying to score car rentals? I know for myself and others in Hawaii, it's incredibly bad.

JONATHAN WEINBERG: It's incredibly bad. Actually, Hawaii tops our list in terms of the locations that are the hardest hit. We're seeing big problems in the leisure destinations. And that would be, really, anywhere in Florida, Phoenix, Las Vegas, and especially hard hit is Hawaii, and within there, the islands of Maui and the big island, as well as Oahu. We're seeing prices anywhere from $200 to $500 plus per day. And that's if you can even find a rental at all. We've heard of many people that are cancelling their trips because they simply can't get a rental car.

KRISTIN MYERS: Yeah, you go to Hawaii for just a week, and you're going to be spending a couple of thousand dollars on just the car rental alone. So why is this? Because I would have thought with everything coming out of the pandemic that I'd be able to score some cheap deals, like I was a couple of months ago when car rentals were almost $20 a day. So I was a little bit surprised to see that the car rental prices has surged so much. What's behind that move?

JONATHAN WEINBERG: Right, so the picture in 2021 is very different than 2020. In 2020, we were seeing prices as low as $5 a day in Hawaii. Clearly, that's no longer the case. When COVID hit, the rental car companies essentially went into survival mode. They pivoted and they sold off as many vehicles as they possibly could, as fast as they could. And that totaled hundreds of thousands of vehicles across the major rental car companies. Many of them sold between 30% and 40% of their vehicle fleets. And they basically right-sized for the demand that they had at the time.

Car rentals actually fared a little bit better than some of the other travel verticals like airlines and hotels. People didn't want to travel by air. They didn't want to be stuck with other people without being able to socially distance. And renting a car was a way to get where you needed to go to potentially take a vacation to get away a little bit, take a road trip, and be able to do that social distancing thing. And I think that the rental car companies benefited from that. And they got to a place where the supply that they had on hand met the demand.

But then you had 2021 come along and vaccinations started, which was a great thing. People started to get more comfortable. And I think that the rental car companies simply underestimated the demand, the amount of people that wanted to get away. I think people were tired of being cooped up at home and being cold in the Northeast, in the Midwest. And you saw this huge migration of people down to Florida. The rental car companies simply couldn't keep up. And we started first seeing a President's Day and Valentine's Day weekend, just 18 out of the airports in Florida were completely sold out. And it's been an issue ever since.

KRISTIN MYERS: So are the days of those deals completely gone now, do you think, even as we come out of this pandemic? Or do you think or are you hearing at least some of these car rental companies that are trying to buy back their stock? I mean, how long is this car rental price surge, this pain that's being passed on to travelers, how long is that going to continue, do you think?

JONATHAN WEINBERG: We actually think it's going to continue through the summer. The good news is that it's not a bleak picture everywhere and at all the time. The biggest problems that we're seeing is people trying to book anywhere from one to three or four weeks out. If you're able to plan ahead a little bit, you're going to be spared the brunt of the high prices. Right now, the problems are predominantly in these leisure areas, but we expect the problem to migrate towards the northeast and the Midwest and the west as the weather gets warmer. Folks are really in areas like Florida, Phoenix, Las Vegas right now because it's warm.

But as it warms up in other areas of the country, people are going to want to get out and take those road trips. And I think that we're going to see the problem kind of spread. And the rental car companies are going to have difficulty balancing out that demand, as they have in previous years. So I think people really want to plan ahead if they need a rental.

And the great thing about car rentals is that you don't have to put down a credit card in most cases. You can put what's called a pay later rental, where you don't pay until you get to the rental car counter. And that's really the key thing. You can be a little bit speculative with your travel plans because you could always cancel or change without any penalty.

KRISTIN MYERS: All right, I almost said I didn't want to have this conversation-- I'm not going to lie, Jonathan-- because Autoslash is one of my best kept secrets. And I almost didn't want to compete with folks that are going out there and trying to get rentals. I know some deals are definitely still available on Autoslash.com, so thank you for building that platform. Jonathan Weinberg, founder and CEO of Autoslash.com, thank you so much for joining us today.