Recession Leads to High Rental Car Prices

The ailing economy has had some positive effects on travelers recently. Namely, there have been some excellent deals on flights and hotels.

The same can not be said for the rental car industry however. Rental car prices have recently been higher than ever, and when you stop to think about it, it can all be explained by simple supply and demand economics.

Consider hotels. Hotels are fixed in supply. Once they are built, they have the exact same number of rooms available to travelers every night. In the recession, demand has fallen. So, if you recall your economics lessons, if supply is steady and demand falls, the price must also fall. This is evident in some of the great hotel prices we have seen recently.

Now consider how a rental car company operates. Their fleet of rental cars is very easy to manipulate. They can either buy or sell cars to increase or decrease their supply of cars available for rental. This is what has been happening across the board among all major car rental companies recently. Large numbers of cars have been sold off resulting in fewer cars being available for rental. Analysts estimate that the total rental car fleet in the United States has decreased from 2 million cars 10 years ago to around 1.5 million cars today. The result is lower supply, and apparently demand for rental cars hasn’t fallen enough to offset the decline in supply, resulting in higher prices for rental cars.

With rising rental car prices prevailing, it is imperative that you search out good deals and coupon codes online to be sure you don’t overpay for your rental car.