Will the price of rental cars return to pre-pandemic rates?

The post-pandemic rates for rental cars have shot up significantly. The price hike was due to the sudden demand for rental cars and the inadequate supply of rental cars.

When the lockdown was imposed, travel came to a standstill overnight. Many car rental businesses had to get rid of a few cars from their fleet as there was high maintenance and indirect costs involved during the pandemic and many businesses hit low or no profits.

So, when everything started getting back into normalcy, the rental car companies couldn’t match their supply with the heap of demand for rental cars, resulting in raising the prices.

But, after nearly two years of the pandemic surges makes you wonder, will the price of rental cars return to pre-pandemic rates?

Transport Substitutes

Millions of Canadians are now fully vaccinated and ready to travel. With the demand for rental cars continuously growing, the supply of cars is still depressed. If car prices continuously remain high, people might opt for other options like uber or public transport. There are many options for travel and transport in the market. Depending on how long and how desperately they need a vehicle, people might choose the budget-friendly option.

Adopting the price hike

Generally, high prices have unpredictable ways of fixing themselves among the people. With time, people tend to adopt and accept the new hike and spend anyways. For business travellers, the price hike may not be a big issue but, on the other hand, there are high chances that leisure travellers and middle-class families being affected. The concerned might take decisions like switching up or foregoing other leisure activities or lifestyle changes to compensate for the rental car price hike.

Extended lockdowns

With variants like Delta and Omicron, people may tend to limit their travel once again. Limited travel will result in low demand for rental cars. So, there might be possibilities for the rental car prices to return to match the pre-pandemic rates. The repeated lockdowns and spreading of the virus has been a one-of-a-kind situation for the managers and owners of car rental companies. Even though they’ve dealt with situations like economic crises and recessions, this pandemic has definitely been challenging to take the right, strategic decisions.

Rebuilding of car fleets

When rental car companies slowly recover and rebuild their fleet, there are possibilities of the prices returning back to the pre-pandemic rates. However, this involves time. With a proper Fleet Management Software or System, companies can assess their fleet and buy an additional number of cars to upgrade and expand their fleet. Doing so will bring the market back into something closer to its normal equilibrium.

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