How Sixt and Turo are addressing ongoing car rental shortages, skyrocketing prices in Canada

Making the journey to an out-of-town event or vacation has proven difficult this year, but it’s not about COVID-19 restrictions, it’s due to persistent car rental shortages and skyrocketing car rental prices in many places in Canada.

According to data from Statistics Canada, published in May, vehicle availability issues in Canada in 2021 fuelled a 31.9 per cent price increase for rental cars, as fleet inventories remained “well under pre-pandemic levels.”

As the travel and tourism industry began its recovery with COVID-19 restrictions starting to loosen in 2021, a global semiconductor chip shortage and supply chain issues loomed over passenger car manufacturing, just after rental car companies reduced their fleets when travel was essentially halted earlier in the pandemic.

It’s that combination of still having this reduced car fleet at rental companies, paired with supply chain issues and massive demand from consumers with a pent-up desire to travel that has made renting a car both difficult and pricey.

While car rental issues persist Canada Sixt, a leading international provider of mobility services, which started in Europe, has expanded into the country just as rental companies in Canada are trying to keep up with demand.

“I think if you look at the Canadian market, three companies own the eight largest rental company brands in Canada, and I think this leads to two things, first of all, there is high potential to enter the market now,” Sixt Chief Operating Officer Nico Gabriel told Yahoo Canada. “Secondly, it brings more of ease into the market by providing more…access to the vehicles through our entering the market.”

“I think there are two things which you always have to keep in mind when entering a market, you only have the first impression, so…this overbooking, providing cars in the wrong state, we cannot afford that. That is also ingrained into the mind of…the team [in Canada], that mistakes cannot happen because you loose customers, customers are king.”

In Canada, Sixt commenced its operations in Vancouver with a location in downtown Vancouver’s Library Square and boasts a “premium” car rental experience, with BMW and Mercedes-Benz vehicles.

“Over the last couple of years with a lockdown, some of the car rental companies might not have had as much fleet bouncing back to the current demand, so that's why as Sixt, by us entering the marketplace right at this time, we're bringing additional vehicle to service the customers, and we're bringing something that's a little bit different, we're going give them a premium service, and premium experience as well,” David Wong, Regional Vice President for Sixt in Canada, based in Vancouver, told Yahoo Canada.

“When we take a reservation, we will make sure the car’s available, and we're there and ready to go when the customer comes up. The industry sometimes, they [overbook], similar to airlines, but...when we take a reservation, we’ve got to be able to fulfill that reservation.”

Sixt plans to further its expansion into Toronto next, and the company is also expected to soon offer a digital counter-by-pass, which will allow customers to not only bypass the counter, but pre-select the vehicle they want to reserve within two hours of pick-up. Ultimately, their goal is to move away from the “standardized” way car rental companies have operated in Canada.

“Our formula is for customers to expect better,…better service, better experience,” Gabriel said. “I think these are our mantras, to have an easier process and be faster at the counter, but also providing service, especially in consultation, if necessary for our customers, but not hassle them with these kinds of things if they don't need it.”

“Trying to cater according to the needs of our customers and not in a standardized way.”

Canadians flocking to vehicle sharing platform

When it comes to not conforming to industry standards that don’t seem to be assisting in pulling us out of the current issues facing the car rental industry, many consumers are looking to alternative options, like vehicle sharing platform Turo.

“Across Canada, our summer bookings are up 250 per cent year-over-year, so we've seen incredible growth,” Bassem El-Rahimy, Director & Head of Marketing at Turo Canada told Yahoo Canada. “In Toronto, summer bookings are up nearly 200 per cent.”

“Nova Scotia has been our fastest growing province, we see summer bookings there up 3,000 per cent, that number just blows my mind, and we're really seeing Canadians explore the East Coast more and more. But Calgary, Toronto and Montreal remain top destinations for us from a trip volume standpoint.”

Essentially, Turo is an online platform that connects customers with Turo “hosts” who are renting out a vehicle nearby, similar to how Airbnb works. Turo users create an account and provide the essential information for approval, including valid driver’s license information. Once approved, they can search on the mobile app or website for nearby cars to rent for their trip, reviewing the vehicle description and any guidelines from the host, with insurance available for every reservation and 24/7 roadside assistance available to users, at no cost.

With massive demand for bookings through Turo this summer, for example, the platform saw about a 300 per cent increase year-over-year in bookings for the past August long weekend, El-Rahimy identified that recent issues Canadians have faced with traditional rental car companies, including skyrocketing prices, have been drawing consumers to the vehicle sharing platform.

“That's really why Canadians turn to Turo, it's really about the convenience of being able to book a vehicle from your neighbour, from somebody down the street, or somebody around the block, instead of having to go to say an airport location,” El-Rahimy said. “So that's really one of the beauties of the Turo platform is that convenience,...you could also get the vehicle delivered to you, making that experience that much more convenient.”

“We hear frequently from guests that these local hosts have really saved their trip, saved their vacation… They're really, really grateful for a host to kind of be able to step in and ease that car rental crunch in heavily touristic markets.”

One thing that’s been a constant since pandemic measures were put in place has been an increased awareness and care for cleanliness measures, something Turo also highlights in its offerings.

“Through the pandemic and of course now, cleanliness is something that we're all very critically aware of, and that's something that our host community also understands,” El-Rahimy stressed. “So we have both a cleaning and disinfection training for our host community to really ensure that they're prepared and have the knowledge to fully disinfect vehicles in between trips so you can rest assured that any vehicle you are you get from Turo has gone through that process, and is safe for you to drive.”

Most recently Turo expanded its services into Newfoundland and Labrador, New Brunswick and Prince Edward Island in May, particularly as tourism and travel businesses in the Maritimes see a massive surge in demand.

“We've really been on a mission to be a platform that's available nationwide and we're making progress towards that,” El-Rahimy said. “Our hosts are really able to alleviate the car rental crunch on the East Coast, which is arguably even more intense than some of the bigger cities like Toronto and Vancouver.”

For anyone looking to try out Turo as an alternative to traditional car rental companies, the company's tip for booking the car you want, at the price you want, is to check the platform frequently, because users have the ability to monitor cars that become available near them.

While no one can be certain if, and when, these strains on the car rental industry will subside, the demand is certainly sustaining, so the consistent tip is to book something as soon as you can.