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Matt Landau wanted to find a rental car at a reasonable price — it was cheaper for him to rent a U-Haul truck

Andrew Keshner

Welcome to America in 2021 when prices for the most unexpected items have soared

So many things about life during a pandemic do not make sense.

Up until last week, Matt Landau had never actually driven a U-Haul truck. It's an odd choice of vehicle for someone who is not in the moving business. He is not moving house, nor is he moving other people's stuff.

Nevertheless, he drove a moving truck on the streets of Maui, and on the narrow roads through the island's lava fields. Some people raise their eyebrows, perhaps understandably, and others wave. All he wanted was a car, but they were simply out of his price range.

Welcome to America in 2021 when prices for the most unexpected items have soared. Auto rental prices increased by nearly 506% on the year in April, according to the Cleveland Federal Reserve, but this is mainly due to COVID-related supply/demand and, analysts say, not part of a permanent inflation-related price increase.

It's not much rosier for those who want to buy a used car rather than rent: average used-car prices (link) surpassed $25,000 for the first time, partly due to the global chip shortage, and seating-foam and plastic supply-chain issues.

For Landau, a U-Haul was not his first choice, of course. At the start of the pandemic, millions of consumers noticed a shortage in toilet paper, hand sanitizer and Clorox CLX (#phrase-company?ref=COMPANY%7CCLX;onlineSignificance=passing-mention) wipes. And now, more than a year later, people like Landau are finding it hard to purchase other items for a reasonable price.

When Landau was shopping around for rental cars, he saw daily rates for a normal sedan between $400 and $500, "if you could even get one -- most were sold out." He paid approximately $100 daily rate, plus mileage and gas.

Aside from the truck, Landau has nothing to do with the moving business. He is the founder of VRMB (link), a consulting company that helps vacation rental owners and managers grow their businesses (in a category that has taken off in recent months, (link) by the way). He and two members of his staff were on the island for a weeklong trip to visit clients, and he mixed in some sightseeing.

He did, however, get friendly waves from other U-Haul (UHAL) drivers. "It's like a little inside club," he said.

The truck was good to tote groceries and paddle boards, said Landau, but it was tricky to park, and the acceleration was underwhelming. Still, it did the job, and after a long search for a rental car, this is what he ended up with.

Landau's car-rental dilemma is similar to the predicament many people have found themselves in during the pandemic: struggling to find certain items at a reasonable price. This is the summer 2021 edition (link). We've already seen this pandemic mismatch on supply and demand.

The rental-car shortage stems, in part, from rental-car companies across the country selling cars in the early days of the pandemic when people stayed home, and a dearth of chips required for a car's safety systems, braking and entertainment consoles. (link)

Tesla (TSLA) is reportedly willing to pay upfront (link)for the chips, and other car makers including Ford (F), Volkswagen and Daimler have all issued warnings (link)about the shortage.

The shortages and delays create a "domino effect as rental-car companies work to increase their inventory of new vehicles in time to meet the increased demand for domestic road travel," said AAA spokeswoman Julie Hall. People want to see the world, and their friends and family, after missing out on summer fun last year.

A U-Haul spokesman pointed to a previous statement from Kaleo Alau, the president at U-Haul Company of Hawaii. In April, Alau said, "We have seen a considerable uptick in U-Haul rentals from customers who are visiting the islands now."

The demand is typically for pickup trucks and cargo vans and the reservations usually last up to a week. "We realize this demand is occurring when tourists are unable to secure a rental car, or they learn that our rental fleet options are more affordable," he said.

That might mean less available equipment for the purpose of moving, but Alau said the company is "working everyday with our primary customer base -- the islands' residential movers -- to ensure we can still meet their transportation needs."

Last Memorial Day weekend, for instance, an estimated 37 million people hit the road for a trip of at least 50 miles, according to AAA estimates. That's a 60% increase over the 23 million people who traveled the previous Memorial Day weekend, the lowest figure since AAA began calculating estimates in 2000.

Shrinking supplies and higher demands are creating high prices. Around Memorial Day weekend, the average daily rental rate is currently $134 -- that's double the average this time last year, Hall said.

Landau, meanwhile, continued to get the side-eye from residents in Maui for driving around in a U-Haul truck. "They clearly identified us as not moving anywhere," he said.

-Andrew Keshner; 415-439-6400; AskNewswires@dowjones.com

 

(END) Dow Jones Newswires

06-07-21 1601ET

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