Rental car industry struggling to bounce back after COVID-19 pandemic

While issues at the airport have been front of mind for travellers over the last month, the rental car industry is also facing major disruptions.

Car shortages, fuel prices and increased demand from travellers have been putting immense pressure on the industry.

A recent Statistics Canada report found inventory shortages led to a more than 31 per cent price increase in rental cars, even when tourism activity was still low amid the COVID-19 pandemic.

Wayne Smith, a professor at Toronto Metropolitan University, said this issue has been ongoing for the last year and a half.

“The rental market kind of dried up for two years, so a lot of the rental companies what they would do, is one of the ways they were trying to make their revenue float the last couple of years was they were selling off their rental car fleet when they’re priced at premium prices,” Smith said.

However, with the new car market lacking inventory due to supply chain issues, rental companies have been unable to replace the cars they sold off during the pandemic.

“We’re probably going to see another year, or maybe a year-and-a-half, before the car rentals can get their fleets back,” he said. “So they’re waiting for new car prices to actually come down a little bit and to be able to get delivery of new cars on a regular basis.”

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He adds the average rental car only has about a two-to-three-year shelf life in the first place.

The car rental industry isn’t the only one dealing with these inventory shortages, as vehicle buyers are being told to be prepared to wait weeks, months or even the next model year for their new wheels to get on the road.

“The transportation system right now is in a whole lot of hurt between the airlines and gas prices, and then you put in the rental car industry,” Smith added.

“We want to make a recovery in the industry, but it’s hard to get around and move around.”

Anubhav Vashishtha, a Toronto resident, said he has struggled with renting cars and adds he is not alone.

“They are struggling to find cars, gas prices are very high, and overall, it is not a nice place for renters at this time in downtown Toronto,” Vashishtha noted.

Smith said the key to making sure you get access to a rental car is to book well ahead of time.

“You also might want to look at some options available as well, especially in large cities, so things like where you rent a car for two hours or an afternoon or something like that,” he said.

“And those are a really good option for tourists because you may not need the car all day you may only need it for two or three hours stretch to go see something and come back.”