‘Carpocalypse’ predicted to hit Canada this summer as car rental agencies run out of vehicles

A ‘carpocalypse’ could be coming to Canada this summer amid a shortage of rental vehicles and rising cost.

Demand for rentals has rebounded to pre-pandemic levels, with hundreds of thousands of Canadians planning to rent a vehicle this summer. But with inventory 15 to 20 per cent 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 across Toronto, said his inventory is fully booked until July. He attributes the vehicle shortage to supply chain issues with car manufacturers.

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

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 wiring harnesses for cars, which are largely made in Ukraine, and catalytic converters, which are made from rare metals that typically come from Russia.

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

Additionally, operators sold off 30 to 40 per cent of rental vehicles due to falling demand at the start of the pandemic, Hirota said. “We were a little bit behind the eight ball because we de-fleeted to match demand (at the start of the pandemic). And then now, we couldn’t re-fleet to match the returning demand.”

The car rental shortage — or ‘carpocalypse,’ as it has been called in the US, where the issue is more pronounced — has been ongoing for more than a year, both Hirota and Selven said.

Selven has resorted to extending the life of vehicles or purchasing used vehicles to keep up with demand.

“Back in the day, once the cars hit about 50,000 to 60,000 kilometers, we were selling them off and replacing them. Now we’re keeping them up to 100,000 kilometers. So there are a lot more maintenance costs,” he said.

Nadia Matos, a spokesperson for CAA, said renters are spending at least 20 per cent more during peak rental times compared to before the pandemic.

Yet, demand for rental cars is still high this summer, particularly on the east coast. “Our travel call center tells us that most of the 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 this July. She was hoping to fly into Deer Lake, rent a car and drive up 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 looking at.

She widened her search to St. John’s — on the other side of the island from Anchor Point — hoping some vehicles would be available.

“St John’s, being a fairly populated area in Newfoundland, I thought it would have been a little bit 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 more than $2,000 for a week. “The price was astronomical, more than the flights,” she said.

In the end, the surprise visit — Short’s first visit to Newfoundland in about nine years — did not come to fruition. Unable to secure a rental vehicle, Short told her parents about the trip. Her father of her will pick her up from the airport.

“I was… a little deflated when it sort of wasn’t all coming together the way I wanted it. But, you know, that’s life,” she said.

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

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

July and August are the two most expensive months to rent a car in Toronto, according to travel search 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 at 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 is continuing to pose challenges for supply, but added the company is working with manufacturers “to secure and continuously add new vehicles into our fleet.”

John G. Friess, a spokesperson for Hertz, said in a statement that the company is seeing “strong demand for summer travel nationwide.” While 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 moving vehicles to the areas with highest demand to support our customers.”

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


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