Shortage of car rentals, price hike expected this summer

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A “carpocalypse” could be coming to Canada this summer amid a shortage of rental vehicles and rising costs.

Rental demand has rebounded back to pre-pandemic levels, with hundreds of thousands of Canadians planning to rent a vehicle this summer. But with inventories 15-20% below normal levels, industry experts warn many travelers may be out of luck.

Mathan Selven, general manager of Distinct Rent-a-Car, which operates three rental locations in Toronto, said its inventory was full through July. He attributes the vehicle shortage to supply chain issues with automakers.

“If we have 100 vehicles on order that are supposed to arrive, we might only get 10,” Selven said.

The backlog was originally caused by a shortage of automotive microchips, which control devices such as a car’s navigation system, he said. Then the war in Ukraine disrupted the supply of car wiring harnesses, which are largely made in Ukraine, and catalytic converters, which are made from rare metals that usually come from Russia.

“Vehicle manufacturers have had a very difficult time getting production back to pre-pandemic levels because of all the supply chain issues,” said Craig Hirota, vice president of government relations and member services. at Associated Canadian Car Rental Operators, whose members include major car rental companies and independent operators such as Distinct Rent-a-Car. “The lack of new vehicle supply is certainly impacting all fleet operators, of which rental car operators are probably the largest block of fleets.”

Additionally, operators sold 30 to 40 percent of rental vehicles due to lower demand early in the pandemic, Hirota said. “We were a little behind on the eight ball because we dropped our fleet to keep up with demand (at the start of the pandemic). And then now we couldn’t renew our fleet to meet the return demand.

The rental car shortage — or “carpocalypse,” as it’s known in the United States, where the problem is more pronounced — has been going on for more than a year, Hirota and Selven said.

Selven has resorted to extending the life of vehicles or purchasing used vehicles to meet demand.

“Back then, once the cars hit around 50,000 to 60,000 kilometres, we would sell them and replace them. Now we keep them up to 100,000 kilometers. So there are a lot more maintenance costs,” he said.

Nadia Matos, spokeswoman for the CAA, said renters are spending at least 20% more during peak rental periods than before the pandemic.

Yet demand for rental cars is still high this summer, especially on the east coast. “Our travel call center tells us that most major rental companies are sold out for the summer months,” she said.

Kim Short, a teacher from Richmond Hill, was planning a surprise visit to her parents in Newfoundland in July. She was hoping to fly to Deer Lake, rent a car, and drive to their small town of Anchor Point.

But when she started her search in April – three months before her trip – there were no car rentals available for any of the dates she was considering.

She widened her search to St. John’s – across the island from Anchor Point – hoping vehicles would be available.

“St John’s, being a fairly populated area of ​​Newfoundland, I thought it would have been a little easier. But it wasn’t,” she told the Star.

She even considered renting a car in Halifax before taking a ferry to Newfoundland. There were vehicles available, but it would have cost over $2000 for a week. “The price was astronomical, more so than the flights,” she said.

In the end, the surprise visit—Short’s first visit to Newfoundland in about nine years—did not materialize. Unable to find a rental vehicle, Short told his parents about the trip. Her father will pick her up at the airport.

“I was… a little deflated when things didn’t fall into place the way I wanted. But, you know, that’s life,” she said.

Short has rented a car and taken road trips before. But she has never seen anything like it. “(Before) you could do it with just a few days notice and the prices were reasonable. You paid a few hundred for a week’s rental. Now that has completely changed,” she said.

An Ipsos poll, released May 13, found that 77% of Canadians plan to take a road trip this summer. Eight percent plan to rent a vehicle for their trip. And while more than eight in 10 Canadians have access to a vehicle, seven per cent feel it is not adequate for their trips and will rent or borrow a vehicle.

July and August are the two most expensive months to rent a car in Toronto, according to travel research website Kayak. Renters can expect to pay $75 in July or $96 in August, on average, to rent a vehicle for a day. January is the cheapest month to rent a car, with daily rates around $37.

A spokesperson for Enterprise Holdings, the parent company of Enterprise, National and Alamo, said in a statement to The Star that the global chip shortage continues to pose supply challenges, but added that the company is working with manufacturers” to secure and continuously add new vehicles to our fleet.

John G. Friess, spokesman for Hertz, said in a statement that the company is seeing “strong demand for summer travel across the country.” As supply chain issues continue to impact the industry, he said the company is “working closely with our automotive partners to add new vehicles to our fleet and strategically move vehicles to most requested areas to support our customers”.

Both Enterprise Holdings and Hertz advise customers to reserve vehicles “as early as possible” and consider seeking rental locations outside of high-demand areas, such as airports.

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