Hoping to rent a car this summer? Good luck

Taylor Raggers and her partner, Will Perry, were looking forward to their honeymoon in Newfoundland this summer before they realized they'd have no way of getting around the province.

The couple, who live in Port Hope, Ont., tried to book a car back in February for a trip they planned to take in late June but were out of luck.

"I probably called five or six places and then anything online that I could find, and they [all had] nothing available," Raggers said.

The lack of car rentals means Raggers isn't going to be able to explore Perry's home province and meet family members living there. Instead, the couple will be hitting the road in their own vehicle for a closer destination: Nova Scotia.

"Will really wanted to show me where his family was from. And I really wanted to see Newfoundland. It's big on my bucket list," she said.

History is repeating itself as last summer's "carpocalypse" makes a return. With travel picking up and more Canadians planning to get out this summer as the pandemic eases, car rental companies are trying to secure more vehicles, said Craig Hirota, vice-president of government relations and member services for the Associated Canadian Car Rental Operators.

"Our best estimates show we're probably still 15 to 20 per cent down from pre-pandemic numbers," Hirota said.

Where's my chip? 

Earlier this month, Statistics Canada released the first in a series of reports on the rental vehicle industry, with the first focusing on British Columbia.

The report found that the size of rental car fleets in the province dropped by more than 30 per cent in 2020. And while fleets started to recover in 2021, they did not return anywhere close to pre-pandemic levels as companies struggled to find vehicles.

A major contributor to the shortage of car rentals is the slow pace of new vehicle production. Car manufacturers have been backlogged on production as they continue to face a semiconductor chip shortage, a part necessary for digital technology.

"That was exacerbated by the fact that our industry had to pare down our fleets ... when demand dropped in March 2020," the start of the COVID-19 pandemic, Hirota said.

Montreal-based car rental company AutoPlateau is experiencing this exact challenge. Gabriel Raymond, who works for the company that is owned by his family, said it had to downsize its fleet when the pandemic hit. Now, as it tries to expand, Raymond said it's difficult to find cars.

"The car manufacturers are running out of chips for the cars. So car dealers are running out of cars. So car rental companies are not able to renew their fleet," he said.

But Raymond said the company has been able to weather the shortage because it keeps vehicles around for longer, opting to fix them up instead of replacing them.

Despite having no marketing budget, he said AutoPlateau has attracted customers who have no luck securing car rentals elsewhere.

"It's [stressful] because we have a lot of demand coming in from everywhere that we wouldn't have otherwise because we're a small company," Raymond said, adding that the company relies on word of mouth to attract customers.

The shortage of rentals has significantly jacked up the cost of renting a vehicle. According to Statistics Canada, prices for rental vehicles rose by 30 per cent in 2021, while the overall inflation rate sat at 3.4 per cent.

Hirota said the higher cost of renting a car is partly because demand is outpacing supply, and inflation is pushing up the cost of cars and repairs. 

Planning travel this summer

With summer in sight and most COVID-19 restrictions lifted across the country, tourism is expected to pick up again. The World Trade and Tourism Council is forecasting that the contribution to GDP from Canada's travel and tourism sector could rebound to $157 billion (Cdn) in 2023, just 0.8 per cent below pre-pandemic levels.

That means more travellers, such as Taylor Raggers, will be looking to snatch a car rental.

Raymond recommends that travellers who are hoping to rent a car this summer make plans as soon as possible and to beware of companies that overbook.

"Overbooking, especially in [a] high demand period, means they're going to put more customers on the same car," he said.

Some travellers are also turning to a less conventional transportation option: car-sharing.

Similar to Airbnb, car-sharing services allow people to rent out their vehicles to others. American car-sharing company Turo says its services are helping customers secure vehicles amid the rental shortage.

"What we're seeing is that our Turo hosts are stepping in to fill the void," said Cedric Mathieu, the vice-president and head of Canada at Turo.

Mathieu said the peer-to-peer model of car-sharing is more flexible than a car fleet model, which faces challenges when it needs to increase or decrease the number of vehicles available for rent.

"As the demand started surging back up, we're able to acquire and convince more hosts to join," he said.

Turo currently has more than 50,000 vehicles available in more than 350 cities across the country. Most recently, the company has expanded to Newfoundland and Labrador, New Brunswick and Prince Edward Island.

As for when a recovery for the car rental industry can be expected, Hirota of the Associated Canadian Car Rental Operators said it's hard to predict, given how quickly things can change. But while car manufacturers continue to ramp up production, he said challenges are still likely to persist for the next couple of years.

"I think it's going to remain a challenge to get vehicles through the coming year and possibly the next year after that," he said.