Philly’s painful and profitable — for some — rental car crunch

After COVID-19 shut down travel for much of 2020, an ensuing rental car crunch is remaking summer 2021 plans.

Customers in the Philadelphia region describe long lines, high prices, and a lack of cars when trying to take a day trip to the beach or a road trip around the country. That’s pushed some to change their plans, or to try car-sharing start-ups as an alternative.

“I have kind of given up on using rental cars for the time being, until I hear that it’s calmed down a little bit,” said Derek Lombardi, an urban planner in Philadelphia. Pre-pandemic, Lombardi said, he regularly booked rental cars from the Enterprise location on Washington Avenue to go home to Rhode Island at Christmastime and to take day and overnight trips in the summer.

Now, the lack of availability and higher prices have pushed Lombardi to travel differently, either riding with friends or sticking to places he can take the train.

“It’s definitely put a damper on travel plans,” he said.

Casandra Best, 39, of Philadelphia, had booked flights and hotel stays for a pre-back-to-school trip to Alaska with her husband and daughter when they started researching rental car prices. Seven days of renting a car would run them $1,800, hundreds more than they paid for their flights.

“It was crazy, so we canceled everything,” Best said. The family even looked into renting a van at a Home Depot in Anchorage and using that as their transportation, but those vehicles were also booked.

What was supposed to be a surprise trip for their 10-year-old, a break because “COVID has not been kind to children,” is now indefinitely on hold.

More than a dozen people responded to WHYY News via email and social media describing issues with renting cars this summer, from lost reservations to general frustrations with higher prices and low availability now dubbed the “car-rental-apocalypse.”

Enterprise Holdings, which owns the Enterprise, Alamo, and National brand car rental services, blamed the scarcity on high demand for cars and an ongoing shortage of electronics needed for cars.

“Enterprise Holdings, like the rest of the industry, is seeing increased demand for vehicles for travel,” said spokesperson Sara Miller. “A key challenge right now is global supply chain challenges.”

She urged customers to book as early as possible.

The biggest supply chain issue is a semiconductor or “car chip” shortage, which has plagued the auto industry as a whole since chip manufacturers pivoted to make parts for consumer electronics as that demand surged early in the pandemic. Auto retailers are making fewer cars, and that shortage forced rental car companies to buy used cars at auction, reported Bloomberg. Many are operating at lower levels than they were pre-pandemic, after selling off cars in 2020, when demand was low.

Last-minute cancellations that cost

Julia Jordan, of South Philly, thought she’d found a deal when booking with Payless car rentals through a third-party site, hoping to avoid price hikes. The day she was supposed to start a drive to Maine in June, she got up early to take an Uber to Northeast Philly to pick up the vehicle.

Upon arrival, she got bad news. “[The desk attendant] basically told me that if he had a car, he would give it to me, and that I was one of 10 people he was going to have to say this to that day,” she recalled.

Jordan ended up taking another ride back south to the airport to book a new vehicle. She spent around $1,200, more than three times the price of her original booking. She is still fighting to get the difference covered.

“It was just such a massive headache for what seems … like it could have been avoided,” she said.

Avis, which owns Payless, declined to comment for this story.

Even with demand and prices soaring, pandemic declines in tourism and business travel are still hurting traditional car rental companies, based on local and national figures.

Revenue for car rentals from Philadelphia International Airport in 2021 have been down about 50% when compared to 2019, said James Tyrrell, chief revenue officer at PHL, which receives a portion of the revenue generated by tenants like car rental agencies. The past 12 months have seen 42% of the car rentals seen in the previous 12 months.

Into that void has stepped peer-to-peer apps, according to an analysis by Bloomberg Second Insight, which crunches consumer data.

Airbnb, but for cars

Car rental companies are recovering, but apps are taking up more of the market demand they cannot meet. The fastest growing of the old and new is Turo, according to the Bloomberg analysis, growing 442% between June 2020 and June 2021. Like Airbnb, which operates according to a parallel peer-to-peer model, the apps are attracting plenty of users on both sides in the Philadelphia area. Though Turo and other apps declined to offer local data, anecdotal evidence suggests a growing marketplace in the region.

Bessie Bristow, of Springfield, Delaware County, decided to list her Toyota Camry on the app in May, after seeing a post about it on Instagram.

“It booked, like, that day,” said Bristow, who works in real estate. She and her fiance, Anthony Mungin, still used the cars they put on Turo for errands, to go to work, or to take their daughter to camp, but soon realized they were booked all the time. So they began treating the app like a business, purchasing or leasing cars and listing them when their existing cars booked up.

“We kept running out of cars to drive for ourselves personally, so we just had to keep going and buying another car,” said Bristow.

They’re up to nine vehicles, and they want to keep expanding, although they declined to share their earnings, saying “every month varies” but that “it’s a primary source of income.”

A quick look at availability for the upcoming weekend showed a range of options in the Philadelphia area, with luxury cars going for upwards of $100 per day and a few budget-friendly options showing up for half that amount.

The Bests, the family that blew up their Alaska vacation, are now looking into using Turo when they go to a wedding in Savannah, Georgia, in the fall.

“We looked probably a month ago, and [renting a car] was like $120/day for a basic car, and the Turo was like $40/day, so it was a lot less expensive,” said Casandra Best.

Even if traditional rental car prices dropped, she said, they might still go with the app.