With consumer confidence in travel on the rise, this holiday season travel volume is expected to surge to nearly pre-pandemic days. 

Much of that travel will be by car, but consumers anticipate scarce options and high rental prices. 

Car rental companies are struggling to keep up with increasing travel demand as car supply remains short.

There is an urgent need for alternative options to traditional car rental companies. 

The majority of holiday travel will be by car

Millions of Americans traveled last month for Thanksgiving and this trend is expected to continue through the December holidays. 

According to a Christmas travel survey by The Vacationer 122 million American adults plan to travel for Christmas, Hanukkah, or Kwanzaa. 

Due to ongoing Covid-19 safety precautions and personal preference, the same survey shows that 60.75% of that travel will be by car.

Those choosing to fly may still need a car to get around once they reach their destination and potential last-minute flight cancellations add to the demand for car rentals.

Comparison of holiday travel modes by The Vacationer

Car rental companies struggling to keep up with demand

In the wake of the pandemic, car rental companies sold off their fleets to stay afloat. 

Now, due to global computer chip shortages and therefore slowed manufacturing, rental companies are struggling to expand their inventory. 

This lack of supply coupled with the increasing demand for rental cars has rental prices soaring. 

The national average car rental rate has fallen from its summer peaks, but according to Hopper.com spokeswoman, Lindsay Schwimer, “we expect rental car prices to increase sharply again into the holidays,” as reported by Kiplinger

Like many businesses today, car rental companies are also finding it difficult to hire employees.

Alternative options

Travelers are bound to consider alternative car rental options as the challenges they face with traditional rental agencies add up.

Many alternative rental options have already risen in popularity. 

Zipcar, a car-sharing service, has over one million members in nearly 500 cities and towns, according to their website. And a report by Global Market Insights found that the car-sharing market size “surpassed USD 2 billion in 2020 and is anticipated to grow at over 20% CAGR from 2021 to 2027.”

Visualization of survey data from Global Market Insights

Opportunity for paid rental

This is a great opportunity for dealerships to meet the increasing demand for rental cars by offering paid rental of their fleet vehicles.  

Dealerships can attract new business, earn more money per vehicle, and ultimately improve their bottom line. 

Dealers sometimes hesitate to operate fleets because customers can misuse vehicles and diminish their resale value. 

But careful contracting can protect dealerships against loss, and modern contract tools that use mobile interfaces make it easier to ensure that customers read and understand the charges they’re agreeing to pay.

Pricing page - Mobile contracts dual phone
Mobile contracts can help customers better understand the terms of their rental agreement, helping dealerships provide faster, more customer-friendly service.

The impact of rental contracts on dealership fleet operations could be pretty significant, too. 

If it costs a dealer $15 a day to hold onto a fleet car, and consumers are regularly paying $80 or more per day for rentals, there’s a clear opportunity for profit.

And the benefits to a dealership aren’t limited to the rental contract. 

Dealerships can attract customers for new or used vehicle purchases, can win over new service customers and can build lasting relationships.

Interested in paid rental? Check out our paid rental solution here: https://www.dealerware.com/paid-rental/