Car Rental Pricing Statistics: 2023 - NerdWallet (2024)

FAQs

Why are rental car prices so high 2023? ›

Why are car rentals so expensive right now in 2023? Car rentals cost more than they did a few years ago due to many different factors, but primarily because of supply chain issues related to the COVID-19 pandemic.

The 5% growth year over year is low compared to the growth seen in 2021 and 2022, but that is actually good news. There were about 2.3 million rental vehicles in the fleet across the U.S. in 2023.

But fleet mix is more expensive: Automakers are no longer building inexpensive cars and they're pushing higher trim levels and content. The wholesale market is deflating, but still strong compared to pre-pandemic levels. Revenues are up slightly, but costs are up even more. Demand is stronger than ever.

Aside from the supply and demand factor (most New Yorkers don't own cars) there are insurance issues--NYS requires that rental cars include insurance that is usaully optional in other states, hence the higher "included" rates. Also, perhaps higher insurance payouts for theft and damage (but that's a total guest).

However, as the pandemic waned and demand picked back up, these companies couldn't quickly restore their fleets. Microchip shortages and other supply chain issues throttled supply and drove the cost of cars higher. “The surge in demand is what created that crunch,” Mangahas says.

Through 2023 at least, limited vehicle availability will continue. However, most experts report some recovery on the horizon. There were finally early signs of increased allocation to rental fleet channels in fall 2022. Operators still need to be clever in how they source cars as we inch toward supply recovery, though.

The Car Rentals market in the United States is expected to generate a revenue of US$30.44bn by 2024. It is projected to grow annually at a rate of 1.61% between 2024-2028, resulting in a market volume of US$32.45bn by 2028.

The future of the rental car industry can expect the increased implementation of technologies like IoT and Artificial Intelligence to enhance services. The collaboration of car rental companies with ride-sharing is another development that can be expected in the future.

Car rental demand in the United States is set to increase at a 4.9% CAGR between 2024 and 2034. By car type, the economic car category is anticipated to surge with a CAGR of 4.5% through 2034. Based on end-use, the on-airport segment is set to expand at a CAGR of 5.8% through 2034.

The problem is that production of less expensive cars ($25,000 or less) has suffered due to the chip shortage, and cars currently in rental fleets are largely leftovers from before the pandemic arrived. Many of them were also sold during the summer of 2020 as rental companies moved to reduce their fleets.

Why are all the rental cars gone? ›

A global microchip shortage that has cut production of new cars continues to deal a heavy blow to car rental companies, but most of the pain is being felt by travelers such as Jimenez who find themselves waiting in long lines, paying nearly double the rates of earlier this year, getting denied the vehicle they reserved ...

The day rate for the Bugatti Veyron is $20,000 to $25,000, including taxes, which is about the price of a new Toyota Camry. It's the most expensive car rental in America, according to Royalty Exotic Cars, a luxury car specialist and rental company based in Las Vegas, Nevada, where you can rent the Bugatti Veyron.

Many used rental cars have lower price tags than you'll find from used car dealerships or even private parties. Some of the differences may come from their condition or mileage, but it also stems from the fact that rental car companies buy in high volume.

Why are rental cars so expensive right now? With both business and personal travel booming in the post-pandemic era, demand for rental cars is outpacing the supply.

The situation left many shoppers scratching their heads, and the question our experts hear most is, “When will new car prices drop?” New vehicle price inflation all but disappeared by the end of 2023. That's great news on its face. Still, car prices have increased dramatically in the past three years.

And December's around the corner, usually a good month to get a great deal. New car prices have been falling for most of 2023, with the average new car selling for $47,936 in October, Kelley Blue Book reported. Overall, new car prices are down 1.4% since October 2022 and 3.5% since their peak in December 2022.

The good news is that, in general, prices have been on the decline since late 2022. In May 2022, the average selling price of a vehicle was about $721 over MSRP. Compare that to July 2023, when the average selling price was about $714 below MSRP.

After record-high used vehicle prices declined notably in 2023, pricing is expected to be relatively stable this year. Cox expects wholesale prices on its Manheim Used Vehicle Value Index, which tracks prices of used vehicles sold at its U.S. wholesale auctions, will end the year up 0.5% from December 2023.