Key takeaways: 

• The latest CPI data reveal a 3.8% annual jump in prices.
• Rates are well below pandemic levels, averaging about $47 per day nationally.
• Car rental companies get boost from domestic travel and rising used car values.

Consumers navigating the car rental landscape can take steps to offset any price increases.

Travelers heading to the car rental counter have been enjoying a fairly smooth ride on prices although the latest monthly government data reveal the industry isn’t immune to inflation.^1,2

The Consumer Price Index for June 2025 showed a 3.8% bump for the car and truck rental category on an annual basis, an uptick from muted inflation or declines earlier in the year and in 2024.³

It’s a number that bears watching as more Americans hit the road for summer and fall vacations. About 61.6 million drivers were estimated to travel at least 50 miles by car during the Fourth of July holiday, according to AAA, a 2.2% increase from last year and the highest volume on record.⁴

Similarly, KPMG’s Summer 2025 Consumer Pulse study found that 62% of Americans plan to stay domestic with their travel plans this year.⁵ Lower gas prices have many travelers choosing to drive rather than fly, in their own car or a rental.⁶

Read more: Road trips race ahead in popularity as people stretch travel dollars

Prices steadied after pandemic shocks 

U.S. car rental prices have stabilized in recent years after price spikes and car shortages during the pandemic and its immediate aftermath.⁷

Rental rates climbed nearly 50% from pre-pandemic levels by mid-2022, due to inventory shortages and supply chain bottlenecks.⁸ Prices started moderating in late 2023 as both car production and rental lots rebounded, creating a more even balance between supply and driver demand.⁹ 

Travel site Hopper projected the national average daily rate for 2025 at about $47, roughly the same as last year, with the greatest rental demand in cities such as Orlando, Las Vegas, Denver, Miami, and Chicago, and bookings averaging six days.¹⁰

Rates in more remote tourist destinations like Bozeman, Montana and Anchorage, Alaska can be much higher, often more than $100 a day. Florida remains one of the most affordable states to rent a car, with daily rates as low as $26 in cities like Miami, Fort Lauderdale, Orlando, and Tampa.¹¹

The road ahead: tariffs and inflation 

About 48 million Americans used a car rental service in 2023 and the number is expected to increase to 52 million in 2028, reflecting a 1.6% annual growth rate. But tariffs and inflation paint a tricky picture for the industry going forward.¹²

Three companies account for more than 90% of the U.S. market, led by privately owned Enterprise Mobility, which operates Enterprise, National, and Alamo brands. The other leaders are Avis Budget Group, which includes Avis, Budget, Payless Car Rental, and Zipcar; and Hertz Global Holdings, which owns Hertz, Dollar, and Thrifty.¹³

The industry could face headwinds if tourists and business travelers cut travel spending due to rising prices and other economic concerns.¹⁴ While more Americans are travelling domestically, there are also concerns that inbound travel to the U.S. is softening.¹⁵

But economic uncertainty has also created some unique opportunities for the sector. While earnings have been mixed, both Hertz and Avis Budget group shares have attracted strong interest from hedge funds and other investors this year, amid speculation that tariffs will boost used vehicle prices — and the value of car rental fleets.^16,17

Hertz, for example, had a fleet of over 500,000 vehicles valued at roughly $12 billion in April.¹⁸

Although vehicles are assets, they also face rising costs for maintenance, repairs, and insurance. Such vehicles will eventually have to be replaced with newer vehicles, which could impact the prices consumers pay.¹⁹

Read more:  Coffee prices heat up, travel costs cool off

How to navigate shifting rental rates 

Some 47% of Americans say the increased cost of living has impacted their 2025 travel plans, while 32% plan to spend less than last year, according to Empower research.

Consumers navigating the car rental landscape can take steps to alleviate potential price increases. Like flights and hotels, car rental prices often fluctuate daily and can often be cancelled or rebooked without incurring any fees.²⁰

Size affects the price of rentals and the definition of terms like "compact" or "mid-size" can vary depending on the company. Renting a car from an airport location, while often necessary, can come with higher rates and the potential for additional surcharges and taxes.²¹

It also pays to watch out for fees and charges tied to early or late returns, airport pickups, tolls, gas, and mileage limits. Extras like roadside assistance or insurance might already be covered through credit card or auto policies.²²

Although consumers can’t control inflation, they can make rental choices to avoid unwanted costs and maximize road-trip fun for the summer season and beyond. 

Read more: FTC “junk fees” rule: What it means for travel, rentals and event tickets