Rental car prices expected to skyrocket for ski season
Heavily reduced rental car fleets, the return of international tourists and a total lack of new cars for rental companies to buy is likely to lead to shortages and big price hikes, industry players say.
Ezi Car Rental executive director Kevin Walker said the ski season would likely be the first point where shortages were felt and he advised Kiwis to book well ahead to avoid being hit in the wallet.
The rental shortage has already been felt around the Anzac holiday, with one rental company providing figures showing the price of a Toyota Corolla hatchback jumped from an average post-Covid cost of $65 per day for a five-day rental to $90 per day.
Ski season rates for the same type of car were already about $95 per day and the company predicted this was likely to increase to well over $100 as the season got closer.
Walker declined to make any prediction on how much car rental prices would increase if international tourists returned in larger numbers but said news reports from Tasmania provided a good estimate.
An ABC news report from the end of March, when Tasmania’s rental car shortage hit, put lastminute rentals at AU$337 (NZ$361) per day or AU$2360 ($2534) for a week. ‘‘We cannot predict what is going to happen but it is reasonable to suggest that prices will rise because of the shortage of availability. It is just simple supply and demand economics,’’ Walker said.
‘‘Demand will exceed supply, and rental pricing will increase as a consequence as has been the experience in Tasmania, Honolulu, California, Florida and other tourist destinations that have opened partially and have been affected by a shortage of vehicle availability.’’
The predicted shortage and price rises are based on a number of factors, with arguably the biggest being the reduced size of rental car fleets. Go Rentals, one of the country’s largest independent rental operators, told Stuff its fleet fell from 3000 vehicles to 1100 as a result of Covid-19. Jucy told Stuff it had reduced its car fleet by close to 80 per cent, although it retained the majority of its campers.
Stats NZ figures show the number of rental cars licensed in New Zealand plummeted from 45,201 in March last year to 24,422 at the same point this year.
Shortages compounded by lack of new cars to buy
Walker said shortages would be compounded by a ‘‘massive’’ shortage of new vehicles on the market that companies could buy to replenish fleets. The majority of new cars, he said, were going to retailers, which could make bigger margins from private sales than could be made selling to rental outfits.
‘‘Rental operators are unable to purchase new vehicles due to supply constraints in the new vehicle market. This will likely take up to 18 months to rectify,’’ Walker said.
This followed a year when new vehicles purchased by the car rental industry fell, from 19,787 in 2019 to 3604 in 2020. The third factor was the return of tourists from the likes of Australia and the Cook Islands.
Return of overseas tourists
Walker said so far bookings from Australia had made up a minimal part of demand but there were hopes the South Island ski season would bring tourists from across the ditch.
‘‘I will say pre-ski season there will be no new vehicles available to the rental industry for purchase.’’
Should the Australian bubble prove successful, Walker said the rental industry ‘‘will have significant capacity issues’’.
Customers might think high rentals were a boon for rental companies but Walker said success in the long run meant offering value for money and attracting return custom. He said most rental company systems were set up for larger fleets, so there were also efficiencies to be gained in regrowing supply.
Go Rentals chief operating officer James Dalglish agreed with Walker that Kiwis should plan well ahead when booking a car to avoid being caught by shortage.
‘‘Maybe the days of being able to just turn up and get a rental car at the last minute are, for a period of time, behind us.’’
Dalglish said school holidays, a long weekend and the trans-Tasman travel bubble had created high demand recently but he thought Kiwis were largely through the worst of it for now.
Jucy Rentals spokesman Dave Simmons said the trans-Tasman bubble had created an unforeseen boon, as Kiwis seemed to be booking campervans for January and February next year.
‘‘Anecdotally we think it is actually New Zealanders being given a bit of a spur, saying if we are going to do one of these domestic holidays we better crack on and book it because the Aussies are coming. ‘‘It was a pleasant surprise.’’ Jucy had a particularly hard time during Covid-19 when 99 of its vehicles were stolen. Almost all were recovered.