Summer holiday car hire is almost 70% more expensive than it was in 2019

The pandemic is still making holidays abroad more expensive due to the impact on average rental car prices.

According to exclusive data shared with This is Money, the cost of renting a family hatchback for a week in popular summer destinations is nearly 70 percent higher than in 2019.

The average cost of hiring a car of this type over this summer holiday is £520 – four years ago, before the global impact of Covid-19, £310.

Experts say this is because car rental companies have not been able to fully replenish their stock of vehicles due to problems with the delivery of new models due to the pandemic.

The study on the cost of car rental worldwide was calculated by the provider of deductible insurance, iCarhireinsurance.com.

It turned out that renting a Volkswagen Golf for seven days in popular travel destinations during the school holidays is 68 percent more expensive than in 2019.

However, the average price is around £100 cheaper than last summer, when holidaymakers paid a whopping £652 for a comparable rental car in 2022.

The study looked at the cost of a ‘base’ rental for a mid-sized family hatchback during the week of July 29 to August 5, 2023 at six rental companies: Avis, Budget, Enterprise, Europcar, Hertz and Sixt.

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

It turned out that Munich (£365) and Florida (£406) are the cheapest locations to rent a car for a week this summer, while Geneva (£711) and Milan (£650) are the most expensive.

The biggest price increases since 2019 were seen in London (+215 percent) and Sydney (+140 percent).

In contrast, prices in Faro remained most stable, although average costs were still 21 percent higher than four years ago.

Why are car rental costs much higher than in 2019?

The cost of renting a vehicle remains higher than pre-Covid levels, mainly due to rental companies not replenishing car stocks since the pandemic.

With national lockdowns and travel restrictions put in place during the 2020 global crisis, many operators were forced to offload their fleets to stay afloat as consumer demand hit an all-time low.

However, when restrictions were eased and travel abroad was allowed again, rental car companies were unable to get their hands on cars to bolster their inventory due to a massive drop in new vehicle production.

This was a result of the shortage of semiconductors that continued to paralyze the car manufacturing sector for months, forcing many automakers to reduce shifts and even shut down assembly lines due to a shortage of computer chips.

Even as supply-chain problems show signs of easing and automakers’ output is increasing, Ernesto Suarez, founder and CEO of iCarhireinsurance, says some operators still haven’t expanded their vehicle numbers enough.

“We saw record high prices for rental cars in 2022, mainly because rental companies drastically reduced stocks during the pandemic and then couldn’t replace them quickly enough in all destinations when travel resumed,” he told This is Money.

‘This, combined with high demand during the peak summer periods, led to eye-wateringly high prices.

‘Since then the supply problems have eased and stocks have been replenished, so we see falling prices.

“However, in many destinations, particularly popular destinations, rental fleet size may not be back to pre-pandemic levels, so if demand exceeds supply at peak times, prices will rise.”

Mr. Suarez says he generally expects prices to fall again next year as the fleet becomes more in line with seasonal demand.

“Some of the rock bottom prices we saw before the pandemic we may never see, but renting a car is still an excellent way to experience a destination and if you shop around you can find good deals,” explained he out.

‘Most rental companies offer free cancellation 48 hours before collection, so it’s worth checking prices closer to your holiday to see if you can get a bargain.’

Watch out for ‘extras’ at the rental desk when you arrive

Also part of the study was an analysis of the cost of rental car ‘extras’ that are often given to holidaymakers when they reach the rental counter and their location.

These are often unexpected additional costs for people at a time when they are most tired from flights and want to reach their destination as quickly as possible.

The report says a ‘super damage waiver’ that covers the driver for any scrapes and dents averages £163, while tire and windscreen covers are £50.

Adding an additional driver costs £63, while hiring a Sat Nav for a week costs an average of £83.

And those traveling with children pay an additional £66 for a child seat for the seven days.

That works out to a whopping £425 and – when added to the cost of the car itself – means Britons are spending nearly £1,000 (£999) for the week away (including filling up with 40 liters of fuel which costs £54 on average) .

Switzerland turned out to be the most expensive country in the survey after adding extras.

Drivers pay an average of £1,327 to hire a compact family car, which includes £711 for a week’s hire, plus £214 super damage insurance, £62 for tires and windscreen, £94 for an additional driver, £120 for a sat nav, £62 for a child car seat and £64 for 40 liters of petrol.

However, it pays to shop around, says iCarhireinsurance.

In Geneva, for example, Sixt charges £585 for a week’s rental, compared to Enterprise’s £814, a difference of £229.

Similarly, in Nice, Sixt charges £498, while Avis charges £740, a difference of £242.

Deductible policies, which are usually sold as super damage waiver and tire and windscreen waiver, are the most expensive additional cost at the rental desk, costing £213 on average in this study.

This is more than six times more expensive than buying coverage from a third-party provider, where iCarhireinsurance charges £33.15 for a week’s European policy including cover for damage (including tires and windscreens) and theft.

The study also looked at the price of gasoline at the 12 different locations surveyed.

The cheapest place to fill up is in the US and Turkey, where a full tank costs just £32, but a full tank costs £65 in France, followed by Greece at £64.

In the UK it costs £58, while Spain is £55 for example.