Car hire costs this summer fall to almost pre-pandemic prices as rental firms replenish vehicle fleets following Covid shortage

Summer holidays abroad should be cheaper this year as car rental costs have fallen to almost the same prices as before the pandemic, This is Money exclusively reveals.

School holiday costs have soared over the past two years, with the price of renting a compact family car in favorite summer destinations in 2022 costing an average of €652 for just one week.

However, prices at the same twelve locations have been adjusted to £380 per week this summer, which is just £70 higher than in 2019, according to data shared with us by iCarhireinsurance.com.

The reason prices have fallen is the increase in the availability of new cars, which has allowed rental companies to replenish their fleets after vehicle shortages that occurred months into the pandemic.

The average cost of renting a family car for a week in twelve popular holiday destinations (listed above) has fallen by 27% year-on-year and is almost back to pre-pandemic prices. And this is mainly because rental companies can supplement their fleet with new models

The research into the costs of car rental worldwide shows that a week’s car rental this summer will be 27 percent cheaper than in 2023 and 42 percent less than in 2022.

The average price faced by holidaymakers last summer was a whopping £520 for a week’s rental, which was 68 per cent higher than people were paying before the pandemic.

This summer the price is only 23 per cent higher than five years ago (£310 in 2019), the research shows.

The car rental insurance company assessed the cost of a weekly rental from July 27 to August 3, 2024 at 12 popular travel destinations based on the average quoted prices from six popular rental providers: Avis, Budget, Enterprise, Europcar, Hertz and Sixt.

The 12 travel locations used for the study are Barcelona (Spain), Crete (Greece), Dalaman (Turkey), Dubrovnik (Croatia), Faro (Portugal), Florida (US), Geneva (Switzerland), London (UK), Milan (Italy), Munich (Germany), Nice (France) and Sydney (Australia).

The research found that Australia (£297), Spain (£306), Germany (£311) and Turkey (£360) are the cheapest places to hire a car this summer.

In contrast, Italy (£446), Switzerland (£460) and France (£523) proved to be the most expensive.

Car rental costs falling: Exclusive data shared with This is Money shows that a week’s car rental this summer will be 42% less than in 2022

The study looked at family car prices from six rental companies – Avis, Budget, Enterprise, Europcar, Hertz and Sixt – in 12 popular European destinations this summer, comparing costs with the same week in 2019, 2022 and 2023.

The location with the biggest year-on-year decline is Sydney, with a massive 46 percent decline.

Renting a car is also much cheaper than a year earlier in Barcelona (decrease of 29 percent), Milan (decrease of 28 percent) and Faro (decrease of 28 percent).

In terms of the smallest declines over the past twelve months, rental car prices in Florida and Nice are down just 10 percent and 13 percent respectively.

Foreign visitors to London this summer can expect to pay 37 percent less for a rental car than last year, with a compact family car for a week costing £366 (down from £577 in 2023).

Foreign visitors to London this summer can expect to pay more than a third less for a rental car than last year, with an average compact family car (like this one pictured) costing £366 per week

And vacationers can get even better deals if they wait closer to the time they want to leave.

Ben Wooltorton of iCarhireinsurance.com said: ‘It’s good to see car rental prices are almost back to 2019 levels.

‘Renting a car is an excellent choice for people wanting to explore their holiday destination and it’s good to see prices stabilizing again after the high costs we’ve seen since the pandemic.

‘However, there may be more bargains closer to summer, so it’s worth looking closer to your holiday and taking advantage of the free cancellation 48 hours before pick-up that many major companies offer.’

Explained: why car rental costs have risen dramatically in recent years

Major car rental companies are benefiting from car production returning to full capacity following parts shortages over the past three years, which have led to a significant drop in new car supply

The cost of renting a vehicle has skyrocketed in the immediate aftermath of Covid.

This was due to rental companies selling their fleets to stay afloat in 2020, when demand hit rock bottom as flights were grounded and people could no longer travel abroad.

However, when restrictions were eased and travel was allowed again, car rental companies were unable to replenish their inventory due to the massive drop in new vehicle production.

This was a result of the semiconductor shortage that continued to cripple the auto manufacturing sector for months, forcing many automakers to reduce shifts, shut down assembly lines and even close for a period due to a shortage of computer chips needed to run their latest manufacturing processes to feed. models.

But now that automakers are back at full production capacity, rental companies have been able to transition their fleets to pre-Covid standards.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, explained: ‘After two challenging years of Covid, parts shortages and production restrictions, new vehicle supply is largely back to normal and delivery times are significantly shorter.’

Iain Reid, chief editorial officer at car buying and selling platform Carwow, said it has also seen positive signs for rental fleets to increase their shares.

“Our own data suggests that lead times for brands are declining compared to a year ago.

‘On average, lead times for electric cars have improved by 25 percent and for petrol cars by 5 percent, with the average lead time for electric cars falling from 7 weeks in June 2023 to 5.3 weeks, and for new petrol and diesel models it is now 5.7 weeks less than 6.

“The fact that lead times are shortening – whether due to increased production capacity, stabilized supply chains for key components, higher inventory levels or a combination of several factors – signals a return to full production capacity, and it appears that it rental market that benefits the most.

‘Because, as recent registration figures show, it is the fleet and business sector that is driving new car sales in Britain. If automakers have the capacity, it is no surprise that they will direct these new cars to large fleet buyers, such as car rental companies, where demand is high.”

Vacationers should beware of expensive rental car add-ons

Although key rental prices have fallen, customers are still faced with significant costs from the optional extras offered at the rental counter, including car rental excess cover (often called theft and collision damage cover).

This alone equates to £168 for just one week, the study found.

Overload protection is usually imposed on drivers at the rental counter, meaning holidaymakers do not have to pay a deductible. This is the amount a driver is liable for if a rental car is stolen or damaged, even if it is not the driver’s property. debt.

The average cost of renting a car seat for a week in popular summer holiday destinations is £67, says iCarhireinsurance

Cover for tires and windscreens also costs an average of £33 for a week, the research found.

Travelers are urged to save money by purchasing this type of cover in advance from specialist providers.

For example, iCarhireinsurance.com, which charges from £33.15 for damage, theft and tires and windscreens for a week in European destinations, which is a sixth of the price the major rental companies are charging this summer (£168 excess and £33 tire and windscreen cover , amounting to £201).

And there are even more rental car add-ons that can drive up vacation costs.

Extra protection and benefits, including adding an extra driver to the policy (€64), renting a sat-nav (€71) and renting a child seat (€67), means drivers can pay up to €403 in cash for seven days extras can pay for a summer break.

‘Don’t be caught buying expensive extras at the rental counter and make sure you take your sat-nav and car seats with you and consider taking out car rental insurance with a specialist insurer,’ says Ben.