Rental Car Companies Resort to Buying Used Cars Amid Microchip Shortage

Christian Wardlaw | May 04, 2021

A global microchip shortage is wreaking havoc across business supply chains, including those that fuel the automotive industry. 

rental car companies buying used cars amid shortage

Without the vital components, car companies must pause production, producing a scarcity of new vehicle inventory just as America’s economy is revving back up. This situation makes it harder for you to find the exact car, truck, or SUV you want to buy. And it makes it harder for you to rent a vehicle when traveling on business or for pleasure.

If you haven’t heard, car dealers are having a tough time keeping new vehicles stocked. The automotive industry’s production problems also make it difficult for rental car companies to buy new vehicles to replenish fleets. During the pandemic and associated steep drop-off in travel, rental car companies sold significant portions of their fleets to survive. Now that people are traveling again, rental car shortages are pushing prices higher – in some cases to stratospheric levels.

For example, if you travel to Honolulu, Hawaii for a week in July, a “Nissan Versa or similar” will cost $830 if you book a reservation two months in advance. Based on a search on travel website Expedia, that is one of the least expensive rental vehicles available at the airport from July 7 to 14. Since Hawaii is a popular travel destination for families, vans are the most costly vehicles to rent right now. The cheapest Chrysler Pacifica rental is a whopping $2,964 for the week.

These rates reflect the imbalance between supply and demand and are forecast to fuel profits as rental car companies rebound from a year of lost revenue. However, to ease this financial pain with consumers and to combat rental car apps such as Turo from siphoning customers, the big rental car companies are buying used vehicles to restock their fleets. (Through Turo, a 5-year-old Toyota Corolla is available in Honolulu for that same week for just $34 per day.)

“The global microchip shortage has impacted the entire car-rental industry’s ability to receive new vehicle orders as quickly as we would like,” Hertz spokesperson Lauren Luster told Automotive News. “Hertz is supplementing our fleet by purchasing low-mileage, preowned vehicles from a variety of channels including auctions, online auctions, dealerships, and cars coming off lease programs.”

With continued production problems stemming from the microchip shortage, the pipeline of new cars won’t fill until later this year. In addition to demand from rental car companies, consumers seeking vehicles are also turning to the used car market to find their next ride. Demand for pre-owned cars, trucks, and SUVs is strong, pushing prices for them much higher than is typical.

What does this mean for consumers? If you don’t need a new vehicle right now, wait until the semiconductor industry resolves the microchip shortage. If you have an extra vehicle that your household rarely uses, now is an excellent time to sell it to realize maximum resale value.

Or, if you live in a tourist hotspot, you might want to look into putting your car on Turo and make a little extra money on the side.

Trusted publications are the sources of information for this article. It was accurate on May 4, 2021, but it may have changed since that date.

Explore new car previews
Volkswagen ID. Aero Concept Preview
Volkswagen ID. Aero Concept Preview
VW is looking to the future with a new concept car. The ID. Aero concept is a sleek premium electric sedan with stunning range and futuristic style, and it’s close to becoming a reality.
Read the full review
2023 Subaru Ascent Preview
2023 Subaru Ascent Preview
Subaru updates the Ascent SUV for the 2023 model year with a light facelift, new safety tech, and improved convenience features.
Read the full review
2024 Chevrolet Blazer EV Preview
2024 Chevrolet Blazer EV Preview
General Motors' (GM) vehicle-electrification strategy is accelerating, and its brands are announcing new models rapidly. Chevrolet has now set a date for the reveal of the new Blazer EV. Chevy will reveal the electric SUV on July 18 with an expected on-sale date of Spring 2023.
Read the full review
Read all articles


Scroll to the top
New Car Preview
2023 BMW i7 Preview
Most Dependable
2019 Vehicle Dependability: Most Dependable Small SUVs
Most Popular
10 Most Popular Small Cars
New Model Update
New for 2019: Jaguar
New Car Preview
2023 Land Rover Defender 130 Preview
More related
articles