Why it’s so hard and expensive to rent a car in Canada right now

The fleet at Jamieson Car and Truck Rental looks very different than it did pre-COVID-19. The number of vehicles on hand remained steady at the independent agency, hovering between 100 and 150 between its two locations in Kitchener and Woodstock, Ont.

But the makeup of vehicles has changed radically. The company has about half the number of cars it did before March 2020, but it has seen a huge increase in its truck offerings.

Courier companies are “so desperate for vehicles” they’re hanging onto minivans and SUVs to fulfill deliveries, Peter Jamieson, who owns the rental agency, tells Global News.

“That has sucked hundreds of vehicles out of the marketplace and they keep those vehicles long-term,” he says.

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The events of the last 15 months, culminating in a surge of demand in June as pandemic restrictions eased and vacation plans were made, have led to a shortage of rental vehicles. Some analysts expect the situation to push prices higher this summer and limit selection.

Global News found rental shortages for minivan, large SUV and luxury vehicle bookings in August from Kelowna, B.C. to Edmonton. Enterprise at the Halifax International Airport shows that it has sold out of all rental vehicles in mid-to-late August online.

Jamieson says customers should brace for rental prices that are higher than what they paid last summer.

“It feels as if demand is increasing, so that shortage is going to become greater, which means rental rates are going to go up even more,” he says. “They may have to look at a different class of vehicle, a larger or smaller vehicle and be flexible in their expectations.”

The current squeeze in Canada echoes the situation in the U.S., which reopened sooner and saw an earlier spike in demand. It’s been widely referred to as “car-pocalypse” by American media and dubbed “America’s number-one travel problem of 2021” by Forbes.

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As demand plunged during the pandemic, rental operators across Canada sold off 30-to-40 per cent of their fleets on average, according to the national group that represents the industry.

“Typically a strong Canadian dollar works against wholesale vehicle values because it tends to limit demand from U.S. buyers. However, there was and remains such strong demand for vehicles new and used, in the U.S.,” says Craig Hirota, vice president of the Associated Canadian Car Rental Operators.

According to U.S. online marketplace Carvana, wholesale prices on used cars increased as much as 25 per cent year-to-date in June .

Jamieson says selling vehicles over the past year meant his agency was able to get “really good money” for their used cars.

Bulking up those depleted fleets to meet increasing demand “is going to be very difficult Hirota tells Global News. Between a global microprocessor chip shortage, which has taken on toll on car manufacturing and worldwide supply chain issues, the car rental shortage is not expected to be rectified this season.

Hirota expects it to get worse as demand from corporate clients, insurance companies offering loaners after accidents and travel pick up, similar to the U.S. situation.

“We haven’t seen it as acutely in Canada yet, simply because our demand hasn’t resumed with the same enthusiasm yet that they’ve started to see in some other jurisdictions. But it will be very challenging,” says Hirota.

Jamieson suggests prospective customers branch out and look at several companies, which may have different product mixes.

“If you’re used to renting from one national car rental company, don’t be afraid to look for an independent rental car company. Those smaller companies have very good, clean vehicles and they may be $5 or $10 a day less,” he says.

“I think the best advice is, as much as possible, is to try to plan ahead in advance to avoid disappointment,” says Hirota.