Subs exclusive: Why the car rental business is struggling

They must be wishing car makers still needed them. According to Poston, not only have rental companies been put to the back of the queue for new cars, but when they do finally get them, they're also having to pay 'top prices', which, he estimates, have risen recently by up to 15%.

Mark Kendall of Kendall Cars, a medium-size rental company based in Surrey that buys 250 cars per year, says the situation is critical. "Rental firms are short of around 100,000 vehicles in total. I'm still waiting for cars I ordered months ago. Some have been cancelled by the manufacturers and new terms put in place that will mean they're much more expensive. In fact, some car makers have told me I must pay retail – this when the prices of some cars have risen by up to £10,000. To be sure I get what I need next year, I will have to place my orders in August, whereas in previous years, I could have waited until January."

Kendall says that among the hardest new cars to source are automatics but small cars, including the Toyota Aygo X and Peugeot 208, are also difficult to obtain. "I suspect that manufacturers prefer to save what few microchips they have for bigger and more profitable models."

Another consequence of the shortage of new cars is that where, previously, rental firms sold their unwanted vehicles on the used market, now they're having to buy them from it in a bid to plug gaps in their rental fleets. "Rental firms have become heavy buyers of used vehicles," says Nothard. "The bad news for dealers is that because they think in terms of what they can earn renting out a car rather than, like a dealer, what it's worth trade as well as retail, they're becoming very aggressive competitors. Some rental firms are now among the top 10% of used car buyers."

In addition to filling gaps in their fleets, he says, rental firms are also rushing to replace cars that they've had to keep for longer and that are now running up maintenance and repair bills. "The pressure's on for them to dispose of older cars before they become uneconomic to operate."

At Kendall Cars, Mark Kendall has his fingers crossed he can fulfil customer bookings. "As this year's summer season approached, we began to run out of cars. People couldn't understand they must now book at least two months ahead to be guaranteed a car. I know of operators who overbook but we'd never do that. A rental car can mean the difference between making a business meeting, going on holiday, enjoying a family day out or not."

That being so, consumers will be hoping Kendall Cars and the other rental companies move up the new car queue, sooner rather than later.

The rising costs of rental

For consumers, the most obvious consequence of the shortage of rental cars is higher rental prices. For example, in 2019 the typical weekly rental was £339 but today that figure is £675. However, if the prices of cars have risen 15%, how do rental firms justify a rise in rates of 100%?

"Like everyone else, rental firms are facing increases in business costs, including the cost of decarbonisation," says Toby Poston, director of corporate affairs at the BVRLA. "Increasingly, customers are asking to rent electric cars.