Will Car Buying Become Obsolete as Prices Rise and Rentals Take Over?

The car market is changing fast. Prices keep climbing, and more people are turning to rentals instead of buying. This raises a big question: will buying cars become a thing of the past? Or will prices drop again after a global pause in demand? This post explores these trends and what they mean for drivers today and tomorrow.

Why Are Car Prices Rising?

Car prices have surged over the past few years. Several factors explain this trend:

• Supply chain disruptions: The pandemic caused factory shutdowns and parts shortages, especially microchips essential for modern vehicles. This limited new car production.

  
  

• Increased demand: As economies reopened, many people wanted new cars, pushing prices higher.

  
  

• Inflation and raw material costs: Steel, aluminum, and other materials used in cars have become more expensive.

  
  

• Shift to electric vehicles (EVs): EVs often cost more upfront due to battery prices and new technology.

  
  

These factors combined to create a perfect storm, making new cars less affordable for many buyers.

How Rentals Are Changing the Game

Car rental and subscription services have grown rapidly. Instead of owning a car, more people prefer to rent or subscribe for short periods. This trend is driven by:

• Flexibility: Renting allows drivers to switch models or avoid long-term commitments.

  
  

• Lower upfront costs: No large down payment or loan needed.

  
  

• Maintenance included: Rental companies handle repairs and upkeep.

  
  

• Urban living: In cities, owning a car can be expensive and inconvenient. Rentals offer a practical alternative.

  
  

For example, companies like Zipcar and Turo let users rent cars by the hour or day. Subscription services from brands like Volvo and BMW offer monthly plans with insurance and maintenance included. These options appeal to younger buyers and those who drive less frequently.

Will Car Buying Become Obsolete?

It is unlikely that car buying will disappear entirely, but its role may shrink. Here’s why:

• Emotional value: Many people enjoy owning a car as a personal asset and status symbol.

  
  

• Long-term cost savings: Buying a car and keeping it for years can be cheaper than renting over time.

  
  

• Rural and suburban needs: In areas with limited public transport, owning a car remains essential.

  
  

Still, the rise of rentals and subscriptions will reduce the number of new car buyers, especially among urban dwellers and younger generations. Automakers may respond by offering more flexible ownership models or focusing on fleet sales to rental companies.

Will Prices Come Down After a Global Rest?

Historically, car prices tend to fall after supply catches up with demand. The global rest caused by the pandemic disrupted this cycle. Now, as supply chains recover, prices could stabilize or even drop. But some challenges remain:

• Ongoing chip shortages: While improving, chip supply is not fully back to normal.

  
  

• Raw material volatility: Prices for metals and batteries may stay high.

  
  

• Increased regulation: Environmental rules push automakers to invest in costly EV technology.

  
  

For example, in 2023, some markets saw slight price reductions as inventory improved. But overall, prices remain above pre-pandemic levels. Buyers may need to wait a few more years for significant relief.

What This Means for Buyers Today

If you are thinking about getting a car, consider these points:

• Evaluate your needs: How often do you drive? Would a rental or subscription fit better?

  
  

• Check total costs: Factor in insurance, maintenance, fuel, and depreciation.

  
  

• Explore used cars: The used market may offer better deals than new vehicles.

  
  

• Watch for incentives: Automakers sometimes offer discounts or financing deals to boost sales.

  
  

For example, a city dweller who drives less than 10,000 miles a year might save money with a subscription service. A family in a rural area may find buying a reliable used car more practical.

How Automakers Are Adapting

Car makers are adjusting to these trends by:

• Launching subscription programs: Brands like Porsche and Mercedes offer flexible plans.

  
  

• Partnering with rental companies: Some sell cars directly to fleets.

  
  

• Investing in EVs and hybrids: To meet regulations and consumer demand.

  
  

• Improving digital sales: Online buying and home delivery make purchasing easier.

  
  

These moves show the industry expects a future where ownership and access coexist. Buyers will have more choices than ever before.

The Future of Car Ownership

Looking ahead, car ownership may become more personalized and flexible. Some possible developments include:

• More shared vehicles: Communities or companies providing cars on demand.

  
  

• Electric and autonomous cars: Lower operating costs and new business models.

  
  

• Integration with public transport: Seamless travel combining different modes.

  
  

This future could reduce the need for everyone to own a car, especially in cities. But for many, owning a car will still offer freedom and convenience.