Should I just not bother to "reserve" rental cars anymore?

When you reserve (say) a compact car, they may give you a larger or better car but they will generally only charge you the lower price (unless they get you to agree to an "upgrade" it's on them). I once got a convertible for compact price, for example. If you just show up at their door they have no incentive to discount the cars they may have available and may charge a higher price than the one you get by shopping around. If you enjoy haggling maybe this is a feature, but I like to get in and out.

So if you care about the cost, it's a benefit. Even if you don't care about cost, they are obligated to give you some kind of vehicle and not just tell you that their cars are all rented.

With some rental companies you can apparently save time- avoiding the desk and associated queue (and potential up-selling spiels) entirely by reserving in advance with their loyalty program.

NO. You should still reserve the vehicle as that information is used in fleet management. And no, the walk-in should not get the last type in any category if there are pending reservations, so no, the reservations are not 'ignored'.*

The reason for your experiences is that rental inventory for any particular station is just less predictable than other travel related resources, such as airlines or hotels.

They aren't out to get you and the situation isn't mis-managed. If 5 patrons fail to return their Full Sized cars in time, there are downstream consequences. Actually, you should be getting an upgrade in most of these cases.

The best thing to do is join the loyalty program and, when possible, input your flight information. These cars are pre-staged so you can just walk up an go. This is my experience with all the major agencies.

*Be aware that car rental stations have a lot more autonomy then airline stations so, sure, the rental Agent can give away the last car with little controls to prevent this.

Source: personal and work experience.

The experience you have is quite common. There was time when I reserved car every week for an entire year, so I got quite familiar with the process and managers at two rental car locations here. I also have rented cars in over 25 countries on 4 continents (all but Oceania and Antarctica).

This does not always happen but it seem very common in North America. Even if they seem to be scrambling, your reservation actually did something. It made sure that they expect to have the right number of cars on location. They also know they can get away with giving you a larger car and few people will complain. So what they do given your reservation is to ask for other locations to send a car over ahead of time. What happens is that they also count on cars schedule to return usually within a grace period of a few hours. However people often return cars late, possibly at a later date. Most car contracts - if not all - are written so that you just get charged more at the same rental rate should you decide to keep it longer. Most contracts do not even as for people to call ahead of time if they wish to keep the car longer. This is what causes the most scrambling.

At that point the accommodate your with a different type of car or get one from another location. Many times I has driven by the rental company to the other location having already done the paperwork and just hopped into a car at a different starting point.

As a no-reservation walk-in, you are only offered cars available in the category they are. Some places will call other locations at that point but if they can simply say they are out of cars and send you away. In the end, if you get a car, you will be asked to pay for the price corresponding to its category.

Reservations often come with additional services such as free pickup. The process can be faster too if they collect your information ahead of time. Some places are so efficient that they only give you the keys when you pickup, others require a signature (or more).

Oh, always make a reservation.

First, you can typically get a much lower rent. The company has a "rack rate" and they discount from there. You think when a traveller limps up to the last open agency on a rainy night at Chicago/Midway, he gets a deep discount? Not on your nelly.

Second, they only upgrade you. They never (or almost never) give you a worse car than the one you agreed to -- and you always pay the lower rate.

Besides all the other reasons given here, a reservation saves time. If you're a member of the rewards program at a rental car company like Hertz or Avis, they're setup at many airports to allow you to go directly to the parking lot, look for your name on a sign, choose whichever car you want from a particular row (in some cases, they still assign you a particular car, but you often get to choose now), and go straight to the exit, where an attendant will check your ID and give you the rental contract. This is much faster than waiting in line at the counter and you have more choices.

Even if this service is not available at your location, a reservation usually means they have all your personal information and have prepared all the paperwork in advance and have the keys waiting for you, which will make the process faster than trying to start from scratch at the counter.

If you are willing to pay 3* the price you usually get to pay after a bit of deal hunting then go on, stop booking cars in advance :-)

Also, it helps having a guaranteed minimum car level; i.e. I booked a Focus with Hertz, they only had smaller cars left and gave me a droptop Mustang for the same price....