Avoid the great car rental rip-off this summer

The pandemic and a shortage of new vehicles has pushed prices sky-high – so if you’re yet to book your wheels, take note, says Nick Trend

FThere is a huge shortage of new cars – this is especially a problem for the big car-hire firms

eeling well set for your holiday this summer? Villa booked? Hotel secured? Flights paid for? Maybe – as soaring bookings bring news of rising prices – you even feel relieved that you managed to bag it for a reasonable cost.

But have you booked your hire car yet? I hate to be the bearer of bad news, but when you do, you will certainly be in for a shock. And the longer you leave it, the bigger the shock will be.

Over the pandemic, car rental prices in virtually all holiday destinations have soared. Telegraph Travel’s own snapshot survey – repeating and comparing research we did in 2019 – reveals that the cheapest rate for a basic model rented for an off-peak week from Malaga airport in May has gone up by 150 per cent in three years.

As our table shows, in May 2019 you could book an Opel Corsa with one of the big car hire brokers – Holiday Autos – for £77.48, including insurance and excess waivers. When we checked the price for a week’s rental from this Saturday (May 21), the same type of car was selling for £193.34. You could find a similar vehicle very slightly cheaper through another leading broker – Zest (£191.60). But if you went to one of the big global brands, you would be looking at £400 or more.

What’s more, when you look at costs later in the summer, prices this month are looking like bargains. Last week, I checked rates for a Fiat Panda picked up at Palma airport in Mallorca between June and August. The cheapest I could find anywhere was £388 for seven days from June 11. To hire it at the end of the month would cost £530. By August the rate had gone up to £600 for the same car.

And these prices are not freaks. In fact, they are likely to rise even further – at least for July and August. During the last major pinch point – the Easter week – research by Which? Travel found that the average cost of seven days’ car hire had gone up from £119 in 2019 to £280 this year. Among the most eye-watering prices found were a charge of £734 for a Skoda Octavia hired from Rome and £764 a week for a Ford Escape in Florida. Indeed, North America is a particular problem – Zest says that one of its customers had to pay £2,000 for a small compact car in the US over the Easter week.

So what is happening. Why are prices rising so much? Will they come down before the summer, or should we be worried about the warnings that cars may even run out in some destinations in peak season?

There are several problems that are creating a perfect storm in the car hire market. First, the number of people travelling has soared. As Europcar puts it, higher prices are reflecting the “tension between supply and demand”. And, according to Zest’s managing director, Rory Sexton, bookings are already exceeding those for 2019 – so even if there were plenty of hire cars available, there would probably be upwards pressure on prices.

But there aren’t. In order to survive the pandemic, car hire companies were forced to sell their cars, typically reducing their fleets by 30 per cent or more and expecting to expand again when travel restarted. That would be fine, expect that, again because of the pandemic, car and parts production around the world has plummeted. There is a huge shortage of new cars. This is especially a problem for the big car-hire companies that have based their business models on buying in bulk at heavily discounted rates. Now they can’t replenish their fleets and what cars they can get hold of are much more expensive to buy.

Sexton said: “I’ve spoken to many, many companies who have been trying to buy cars and the discounts they are getting are zero.” Some US companies, he adds, have even been buying used cars to try to make up the shortfall, and they are paying more for a second-hand model now than they were for a new one in 2019. He also points out that deliveries of what new cars have been obtained are running much later than usual – in Europe, key batches may not reach the holiday islands like the Balearics and Canaries until the second week in July this year – months behind the normal schedule.

Sexton’s theory is that it is the big companies that are suffering most. Smaller local operators at European mainland airports can “duck and dive”, he says, and buy in small batches, but there are just not enough large-scale deliveries available. He believes this is behind the problem in North America, where the market is dominated by the big brands.

It has reached the situation in Canada where one leading tour operator – Audley Travel – is taking no more

new bookings for that country between June and September this year and is strongly recommending booking now for 2023 to be sure of availability then. According to a spokesperson for the company: “Demand is already very high for the characterful accommodation that we offer in Canada, but there is also extremely low availability on rental cars and more restrictions on oneway routes and vehicle types.”

While high headline prices are a new phenomenon, the long standing issues that have been plaguing car hire for so many years – high pressure sales of over-priced insurance at the pick-up desk, expensive extras, unexpected charges for damage and so on – continue to be a problem.

Care hire complaints remain one of the most common issues that we hear about from readers. Two of the most recent that have been resolved by our consumer champion, Gill Charlton, involved readers Rory McGrath, who faced a £884 charge for a supposed scratch above the wheel arch, made by Avis in Lyon (withdrawn after Gill’s intervention), and Heather Williams, who was billed £277 for a tow charge when her hire car from Bologna broke down and had to be recovered (this was also eventually withdrawn).

Will problems ease now that basic rental prices are so much higher? Rory Sexton is sceptical. There are still too many questionable practices out there, he says.