The chip shortage has forced automakers to idle certain production lines and cut back on production output, leading to tight new vehicle inventory at dealerships nationwide. With new vehicle inventory shrinking and more consumers travelling, some car rental agencies are going to used vehicle auctions to stock their fleets.
A spokesperson for car rental agency Hertz told Bloomberg that it is currently stocking its fleet with as many used cars as it can in anticipation of a post-pandemic travel boom.
“The global microchip shortage has impacted the entire car-rental industry’s ability to receive new vehicle orders as quickly as we would like,” the spokesperson said. “Hertz is supplementing our fleet by purchasing low-mileage, preowned vehicles from a variety of channels including auctions, online auctions, dealerships and cars coming off lease programs.”
It’s a similar story at Enterprise, which told Bloomberg that its fleet acquisition team is currently “working hard” to secure both new and low mileage used vehicles.
Car rental agencies sold off some of their fleet inventory last year after the COVID-19 pandemic ground virtually all travel to a halt. The demand for rental vehicles has now returned, but with the chip shortage leading to low new vehicle inventory, they’ve been unable to re-stock their fleets with new vehicles at an adequate rate.
Even the used market is proving to be tough for car rental agencies, though, with low used inventories leading to higher-than-usual transaction prices for second-hand cars, trucks, crossovers and SUVs.
Jonathan Weinberg, chief executive officer of rental car research site AutoSlash, said demand for rental vehicles is outpacing supply, leading to extremely high rental rates in vacation hotspots.
“We’re seeing some eye-popping numbers,” Weinberg said. “We’re seeing average rates in Florida of $100 a day, $200 a day in Hawaii and $600 a day in Puerto Rico. We think it will get worse in the next couple of weeks. Vehicle travel is up and vehicle inventory is down.”
GM has missed out on the production of more than 80,000 vehicles so far due to the semi-conductor chip shortage. The supply issue is expected to last throughout the year and into 2022, as well, so the new vehicle inventory squeeze is showing little sign of letting up at the moment.