High prices, lack of inventory as rental car operators face vehicle shortage

'Carpocalypse' hits rental car industry Craig Hirota of the Associated Canadian Car Rental Operators discusses the ongoing shortage of rental cars as travel demand picks up.

Canadians looking to get away this summermay have a hard time getting around, as for the second summer in a row, rental car operators are facing a severe shortage of vehicles.

At many rental car locations across Canada, particularly at airports, rental vehicles are completely sold out for much of July and August. And at locations where there is availability, rates can start at $150 a day or more.

Lesley Mitchell is one of the many travellers facing sticker shock while looking for a rental car. She's planning on travelling from Calgary to Halifax in August and said she was taken aback by the sky-high prices for a rental vehicle, with no guarantee on make or size.

"I totally was surprised and took it for granted. It’s usually one of the last things I book," she told CTV News Calgary.

In the early months of the pandemic, rental car operators reduced their inventory, anticipating that demand would plummet. But when travel demand came back up in the summer of 2021, rental car operators couldn't get enough cars in time because of the global chip shortage stalling production at automotive plants.

Data from Statistics Canada showed that in B.C., the average price of a car rental jumped 31.9 per cent in 2021, even though tourism was still almost 30 per cent below pre-pandemic levels.

Prior to the pandemic, B.C.'s car rental industry typically had over 35,000 vehicles during the peak season in the second and third quarters, according to the StatCan data.

But the rental vehicle fleet in the province dwindled to just 18,636 vehicles in Q1 of 2021. And as the travel reason ramped up, the industry only had 24,457 vehicles by Q3 2021 – more than 10,000 cars short of pre-pandemic levels.

Craig Hirota, vice-president of government relations and member services at the Associated Canadian Car Rental Operators, says rental car operators now have more inventory compared to last year, but this is being offset by a surge in pent-up travel demand amid eased COVID-19 restrictions.

"Certainly, it seems like demand is coming back stronger this spring and summer than it was last year... but our industry has also gotten some access to some vehicles in the past year," he told CTVNews.ca on Tuesday. "It's going to be a similar situation."

And while the rental car shortages have affected operators and travellers Canada-wide, Hirota says the issues are "magnified" in more remote parts of the country where it's much harder to shift inventory, such as Newfoundland.

"Atlantic Canada typically has a very short season, so the demand spikes up very dramatically. It can be hard to get vehicles on and off some of the islands out there," Hirota said. "It will probably be tighter in Atlantic Canada and in some portions of B.C. and perhaps the mountain communities in Alberta just because it might be a little bit harder to move vehicles into those areas."

For travellers reserve to book a rental car, Hirota recommends booking as early as possible and checking as many rental car locations as possible, including off-airport locations.

"The farther out you can plan and reserve in advance, the better. I would recommend just continuing to search almost on a daily basis in your intended destination area," he said. " I think the consumer definitely just has to be a little more diligent in searching for their vehicles, but they'll find them."

As for rental car operators, Hirota says they've had to get creative to replenish their fleets. Some have been buying one or two units at a time from local car dealerships while others are getting lightly-used vehicles from wholesale auctions.

"They're doing everything they can to try and get as many vehicles as possible, which is going to be the best way for them to satisfy the demand," Hirota said. " We're constantly in communication with our manufacturing partners to let them know we will take anything they've got as well."

With files from CTV News Calgary.