Deadra Rahaman of Detroit tried to book a rental car ahead of flying to Fort Lauderdale for her daughter's senior-year spring break trip to Florida, but there weren't any available online.
As travel ramps up because more Americans get vaccinated, rental car companies that sold off their vehicles in a hot used-car market last year to survive are facing a supply shortage. Yet fleet sales, the consistent workhorses of the automotive industry, are being sidelined as the automakers face a global semiconductor shortage and favor feeding the pricier retail segment whose demand has recovered more quickly than fleet.
When Rahaman, who works in marketing and advertising, and the four teenagers arrived last month in the Sunshine State, the lines to rent a car wrapped around the side of buildings, she said. After a long wait, she finally got a Toyota Corolla compact from an ACE Rent a Car — for $2,000 for the week. Three teens squeezed into the backseat, and luggage that didn't fit in the trunk crowded the front.
"It's just really the uncertainty," Rahaman said. "Yeah, you can use Uber if there's one or two of you. It was five of us. That might be challenging, and what if we couldn't go somewhere? All those things were running through my head, just how we are going to get around."
Non-retail fleet sales — including to rental agencies, landscaping companies, police departments and more — plummeted to just 9% of U.S. auto sales in the second quarter last year after the COVID-19 pandemic shut down production and closed many dealers across the country, according to market research firm J.D. Power. That figure has steadily risen to 16% in the first three months of 2021, but remains below the more typical 20% to 25% of sales.
General Motors Co.'s fleet sales dropped 35% year-over-year in the first quarter compared to a 19% increase on the retail side. Ford Motor Co. and Stellantis NV did not disclose their overall fleet figures. Cox Automotive Inc. estimates they were down 35% and 37% respectively.
"The COVID supply shock, microchip shortage, tire shortage, resin shortage — every day there is practically a new supply challenge," said Tyson Jominy, J.D. Power's vice president of data and analytics.
"Automakers are prioritizing more profitable sales, which are from trucks and SUVs and higher trims. The fleet channel is not as profitable as retail. There are usually less-equipped models in the fleet channel."
Now, rental car companies and auto dealers that sell to painters, plumbers and delivery companies say the vehicles they need are hard to find. And the problem is likely to continue deeper into the year.
"You can't get them," said Bill Golling, president of seven Metro Detroit dealerships, of popular fleet vehicles like the Ram ProMaster van, whose year-over-year sales rose 14% last quarter. "They are basically sold out."