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Rental car rip-off. Prices quadruple due to "post covid demand"?

Current prices for rental cars are of the order of $200 per day. Pre-Covid I would have expected to pay no more than about $60 per day.
Now I find that my car insurance company is paying only $40 per day (all inclusive) for the car which they have provided while mine is being repaired.
When I asked about the very high rates I was informed that it is because of the high demand.

This seems like highway robbery!!!

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Welcome to the Community @Indro

That price level has been widely reported in the press, causing some to cancel holidays because even at those prices there were no rentals available at their destination.

Depending on which insurance company you are with, some of them will arrange a vehicle using their corporate contracts at no out of pocket for a prescribed period, and others will only reimburse/cover to a limit, eg up to the $40 you mention for your policy, more common than the former.

It is, and it appears to be. One of many typical reports in recent press.

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Often in Holiday destinations there are peak, shoulder and off peak rates for many things including car rentals. Pick you time in Cairns as an example and in peak it can be $200 a day yet in shoulder and off peak season it is far less. With off peak being as cheap as $25 a day.

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Most of the car rental companies sold off their stock during the early stages of COVID-19 to save costs…not having to pay ongoing costs for a non-income generating assets. In many areas the fleets were halved by these companies to try and survive the travel freeze caused by government Covid-19 controls.

Now that domestic travel is possible, these companies have been trying to replace the fleet sold off about 12 months ago. If you are trying to buy a new car with a specific specification, you would know that there is many months wait for new vehicles. This has created a significant shortfall between available vehicles and demand.

As rental companies are back in full swing, there fixed costs are the same as pre-Covid but spread over smaller number of vehicles. With demand pushing up prices, the spread of fixed costs over a smaller base has exacerbated the price problem.

This would have been outlined in the PDS when taking out cover.

Some insurers offer $40/day allowance, some offer $100/day or more. It is likely the $40 is offered by budget type insurances to save the cost of the premiums. Unfortunately cheaper or restricted insurance cover to save money may come unstuck when a claim is needed against the insurance.

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Hiya Indro and welcome to the Choice Consumer Forum.

I totally agree with you on all of your points about rental car prices. It seems that Dealers have quite sharply increased their Car Rental Prices right across the board to try and make up for their lost income during Covid-19 Lockdowns.
It all sounds very suspicious to me…

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