When James Charles-Roberts booked a vehicle back in May, he and his family were looking forward to a two-week holiday in Southern California.
After several attempts to visit Disneyland were thwarted by the COVID-19 pandemic, the November vacation would be a chance for the Victoria, B.C., family to use their theme park tickets before they expire.
However, when Charles-Roberts called in June to move his reservation for a seven-passenger Ford Explorer by a day, the cost of the car rental nearly tripled.
“I booked the vehicle for $480 and when I called to make a change the price was $1,286,” he said in an interview. “It was just a minor change so we decided to keep our first reservation.”
The car rental shortage — or “carpocalypse” as it’s been dubbed in the U.S. — highlights what is expected to be a bumpy economic recovery as supply chain issues throw car rental supply and demand out of whack.
The problem started when nearly all travel was halted at the outset of COVID-19 lockdowns and travel restrictions.
Car rental reservations plummeted, prompting companies to drastically downsize fleets and lay off workers.
“Most if not all car rental operators across the world had to reduce their fleets significantly during the pandemic due to extreme reductions in consumer demand,” said Craig Hirota, vice-president of government relations and member services with the Associated Canadian Car Rental Operators.
“Nobody was travelling for vacation and corporate travel was basically non-existent. It left a lot of unused vehicles sitting on lots.”
Lots of demand
Now, the situation has reversed. As the economy reopens and demand returns, a global shortage of semiconductors has crippled vehicle production and caused lengthy delays for new cars and trucks.
“The car rental industry has not been able to resupply their fleets,” Hirota said. “They just can’t get vehicles.”
Enterprise Holdings, the U.S. parent company of Enterprise Rent-A-Car, National Car Rental and Alamo Rent A Car, said the chip shortage “has impacted new vehicle availability and deliveries across the industry at a time when demand is already high.”
The company added in an emailed statement that it’s “working hard to secure additional vehicles to meet the increasing travel demand and support customers’ broader transportation needs.”
Prices skyrocketing for what’s left
In the meantime, car rental operators are jacking up rates amid the tight supply and increasing demand.
“I think there’s some price-gouging going on for sure,” Charles-Roberts said of his experience trying to change his Los Angeles airport vehicle reservation.
The industry-wide car rental crunch is already in full force in the United States, where stories are emerging of tourists renting U-Haul moving vans or private vehicles from locals to get around.
The problem is expected to worsen in Canada this summer, especially in regions that rely heavily on tourism.
Many airport locations in East Coast cities like Halifax, Charlottetown and St. John’s are nearly sold out on weekends this summer.
“The impact is being felt everywhere — at least in hot tourism spots across Canada and the U.S.,” Gary Howard, senior vice-president of marketing and communications with CAA Atlantic, said in an email.
“Most of the fleets are leased so during the high point of COVID, fleets were shrinking,” he said. “Now it is coming back but the car rental companies cannot get enough vehicles back in the fleets.”
While the car rental shortage is expected to be felt more acutely in tourism destinations, prices are up across the country.
Hamilton resident Allyson Rowley said she often rents cars for long-distance travel and to visit family.
In 2019, she said she usually paid about $30 a day, an amount that climbed to about $40 in 2020. But Rowley said she just booked a car for two weeks in August, and the price was $61.52 a day.
“The cost has doubled since before the pandemic,” she said. “I’ve made an ethical and financial choice to not own a car as I mostly walk and bike and only rent a car when I need one, but it’s becoming unaffordable.”
For travellers hoping to rent a car this summer, experts say it’s critical to book early, search beyond airport locations and be prepared to pay more than usual.
It may also require alternatives to car rentals such as car sharing or public transportation as they say the shortage isn’t expected to ease up any time soon.
“If you’re planning travel, we encourage you to reserve a vehicle as early as possible,” Enterprise Holdings said. “Providing flexible travel dates and branch pickup locations in your search may help increase your options.”