The semiconductor shortage has slashed vehicle production so much that rental-car companies can’t get the new cars they need, so they have resorted to buying used vehicles at auction.
The problem started a year ago, when the pandemic decimated travel. Rental companies sold hundreds of thousands of cars, said Neil Abrams, president of Abrams Consulting Group Inc., which works in the rental industry. Then travel bounced back right when auto production was hit by a shortage of semiconductors.
The demand is sending used-car costs soaring. The Manheim Index, which measures prices at wholesale auctions, shows they’re 52% higher than they were a year ago. The car crunch is a boon for rental companies, which likely will have strong profits because they’ll rent out every car they own at much higher rates than they charged before the Covid pandemic. But consumers will take a hit if they want to rent a car for vacation.
Read the article at Autoblog.