Hire car shortage expected to disrupt summer plans

Travellers are being warned to book rental cars early, as an acute shortage of vehicles threatens to disrupt holiday plans and spike costs.

Australia’s leading car hire providers are in a race to rebuild their fleets ahead of the reopening of state borders this summer. Photo: Joe Raedle, AFP

Travellers are being warned to book rental cars early, as an acute shortage of vehicles threatens to disrupt holiday plans and spike costs across the country, with hire companies racing to rebuild diminished fleets ahead of summer.

In April 2020, as borders shut and international tourism ground to a halt, the hire car industry off-loaded up to 50 per cent of its vehicles, as leading providers including Avis, Budget, Hertz and Thrifty sought to replenish their existing fleets and establish safeguards against plummeting demand.

But the move has led to a widespread shortage, according to industry providers, who say supply chain disruptions have delayed the delivery of thousands of new vehicles which were expected to arrive before the summer peak.

“Last year all rental operators were in a position where they needed to preserve their businesses,” said Thrifty Australia’s managing director Matthew Beattie. “This meant selling off a portion of your fleet, and we sold around 40 per cent of ours.”

“What no one really anticipated at the time was the major shortage in microchips which continues to hamper the production of new vehicles.”

Discussions with overseas manufacturers were promising three months ago, Mr Beattie said, but noted supply would not arrive in time for the summer surge.

“The conversations we had three months ago were very positive about having more cars available for the summer peak, but in the last four weeks some of the orders we’ve submitted have been halved and they may not be able to deliver to the locations we want them in.

“We’ve been submitting significant orders with most manufacturers. But the reality is we are subject to the current global shortage in cars and because we don’t have manufacturing in Australia we’re dependent on overseas shipping.”

Throughout March and April, tourists in Tasmania and Queensland faced long delays because of the hire car shortage, with some travellers forced to cancel their holidays when they arrived.

Until fleet sizes are restored, visitors to popular tourist destinations can expect huge mark-ups, according to Travel Authority Group’s chief executive Peter Hosper, who said a tourist travelling to Tasmania at the end of year, who wants to rent a standard sedan for one week, would likely be charged $2000 or more.

“The demand is suddenly increasing, and it’s a perfect storm,” Mr Hosper said. “The car companies have jacked up their prices like you wouldn’t believe and it’s clearly going to become a bigger problem heading into the summer holidays when demand peaks.”

Mr Hosper warned summer travellers against making last minute car rental arrangements, saying no one should expect to “rock up to the airport and hire a car on the spot without making booking well in advance”.

“Before the pandemic you could quite easily book a car in Melbourne, with the intention of returning it there, but later decide you want to change plans and drive up to Albury and drop it off there instead. That flexibility won’t be there this summer because depots are relying on their cars to come back.”