Entrepreneurs using a car-sharing app are carving into the rental market in New Brunswick as they take on traditional rental companies struggling to build back their fleets in the wake of the COVID-19 pandemic.
Bassem El-Rahimy is the head of marketing at Turo Canada, a peer-to-peer car-sharing app that operates much like Airbnb does for homeowners.
“Traditional rental car companies are still experiencing very limited or no selection of vehicles for incoming travellers, as they have not replenished their fleets to pre-pandemic levels,” explains El-Rahimy. “With limited supply available, Canadians turned to Turo as an alternative.”
The mass rental sell-off
As public health and travel restrictions hit the tourism industry and prevented many Canadians from crossing provincial borders early in the pandemic, car rental companies began to sell off many of their vehicles.
Then, a microchip shortage hit and the automobile industry struggled to build enough vehicles. Prices soared and selection dropped, even for those with the cash in hand to buy vehicles at those much-higher prices.
“After reaching their lowest levels in the latter part of 2020, rental car inventories remained at low levels in 2021 despite improvements in the tourism sector and the broader economy,” note Statistics Canada’s Marie-Christine Bernard and Emmanuel Dankyi in a recently released report.
In that analysis, Enduring effects of the pandemic: The case of the passenger car rental industry in New Brunswick, Bernard and Dankyi note the number of vehicles that can be rented out by the big car rental companies was still 31 per cent lower last year than in 2019, the last full year before the pandemic.
An entrepreneur seizes the wheel
As car rental companies struggled with low inventories, San Francisco-based Turo pounced on the opportunity. In late April of last year, the company moved into New Brunswick.
Within two months, Moncton resident Jake Poirier had jumped on the opportunity to rent out his 2015 Nissan Rogue through the platform.
“It was phenomenal,” he says. “All of my customers were so amazing. That’s when I decided to expand with two more cars.”
Quickly trading in his Rogue and a pick-up truck for two other vehicles, Poirier grew his fledgling fleet to three vehicles: a 2017 Jeep Grand Cherokee, a 2011 Toyota Corolla, and a 2021 Toyota Corolla.
And he’s planning to expand. By the end of this summer, the former call centre manager is hoping to add three more cars to his growing fleet, and then another two in the coming years.
He says each vehicle brings him three times as much revenue as it costs him in monthly payments. Under his deal with Turo, the car-sharing company gets 25 per cent of that revenue and he keeps the remaining 75 per cent.
El-Rahimy says New Brunswick-based hosts like Poirier make an average of $1,100 a month using Turo.
“And many of our Atlantic Turo hosts have mentioned they’ve seen summer bookings coming in an hour after their car is live on the platform, showcasing the demand from summer travellers,” El-Rahimy adds.
Those who rent out their cars through Turo, called hosts by the company, can also rent out cars that do not belong to them through agreements with other hosts. That’s one of the ways Poirier is hoping to grow his business.
Poirier says the cost of getting into car-sharing as a business is minimal. His initial investment consisted of a roughly $100 lock box to stash the car key on the outside of the vehicle and a tracker to monitor his vehicle.
Will car sharing kill the rental industry?
Dr. Rob Moir, an assistant professor of economics at the University of New Brunswick and director of the Urban and Community Studies Institute, believes car-sharing is here to stay.
He expects Turo and other car-sharing apps will have as disruptive an impact on the car rental industry as Airbnb had on the hospitality sector.
“We’ve seen home sharing with Airbnb and others … and you can easily imagine that what happened with Airbnb will happen with Turo,” says Moir.
In the hospitality sector, entrepreneurs have in many cases bought several condos with the express purpose of renting them out to short-term stay guests, creating de facto hotels. But the big hotel chains have not for all of that disappeared.
“The Hilton hasn’t folded and left the business to Airbnb,” says Moir. “It’s just that people have gotten together and said, ‘Let’s rent out our spare rooms.’”
He fully expects car rental companies to also weather the arrival of car-sharing competition but to not be as dominant in the market as they once were.
“The car rental agency is going to get things done but differently,” he says. “The importance of car rental agencies won’t be the same.”
In Atlantic Canada, car owners are only behind the wheel for 408 hours a year, meaning their cars sit idle 95 per cent of the year, says El-Rahimy.
“Turo offers a great solution for those looking to turn underutilized, idle assets into income while making car ownership more affordable,” he argues.
Turo won’t say the exact number of hosts or vehicles it has in New Brunswick. In Canada, Turo only states there are thousands of cars and hosts.
Enterprise, Hertz, and Avis/Budget did not return requests for comment for this story by our deadline.
James Risdon is a contributor to Huddle, an Acadia Broadcasting content partner.
