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Saturday,  July 13, 2024 1:26 PM 

Car rental rates in Canada to stabilize: Amex GBT report

  • Other
  •   06-13-2024  2:41 pm
  •   Pax Global Media

Car rental rates in Canada to stabilize: Amex GBT report
(Amex GBT)
Pax Global Media

Car rental rates are expected to stabilize after more than three years of volatility, according to a new report released Thursday (June 13) from American Express Global Business Travel (Amex GBT).

Ground Monitor 2024-2025 projects rates in Canada to increase by +3.4 per cent in the period ending March 2025.

The report says that Montreal, Toronto and Calgary may see moderately higher growth rates as a result of the higher costs associated with providing and staffing city car rental locations.

In the U.S., the company is expecting average car rental rates to grow +2.5 per cent.

2023 was a record year for car rental revenues in North America, the largest rental sector in the world.

2024 and 2025 may be less profitable, with economic growth forecast to see a slight decline and more cars readily available to rent as the auto supply pipeline opens up.

This year’s forecast is a significant moderation from last year’s, when it forecast that average prices for car rentals would increase by +5.0 per cent.

After a prolonged period that saw hefty price increases, the car rental sector looks to be entering a new equilibrium.

In most countries, prices will continue to rise, but more slowly than recently.

The auto production issues that have dogged the industry are now in retreat.

With car rentals stabilizing, consumers should face fewer challenges sourcing the cars they need.

“Ground transportation plays a crucial role in enabling businesses of all sizes, across many sectors, to operate efficiently – and is a key factor in the journey experience for travellers,” said Gerardo Tejado, senior vice-president professional services, Amex GBT.

Fuel prices stabilize

Fuel prices are also expected to stabilize.

The World Bank expects oil prices to decline in 2024 and further moderate in 2025, due to weak global economic activity and increased supply from the U.S. and Russia.

Cheaper oil should eventually mean lower fuel prices at the pump.

But the report warns geopolitical risks — and falls in refinery capacity — could push prices up again.

EV anxiety

Short-term Electric Vehicle (EV) rentals appear to be decelerating.

In 2023, Hertz announced it was selling 20,000 EVs in the U.S., about one-third of its global EV fleet in a shift back to gas-powered cars.

Range anxiety — the concern about the distance an EV can travel on a single charge and the fear of getting stranded during the journey — is one of the biggest barriers to drivers getting behind the wheel of an EV.

In contrast, corporate fleets are enthusiastically adopting EVs to meet their sustainability targets.

Members of Climate Group, a global non-profit representing more than 500 multinational businesses with a mission to drive climate action, states that members of its EV100 initiative are collectively operating 57 per cent more EVs this year than last.

Favourable tax treatment is a strong incentive to make the switch.

In France, there is a law mandating a minimum proportion of EVs in company fleets.

Younger people open to alternative ground transport options

A 2023 study by McKinsey found that younger people (aged under 30) were less likely than older generations to use private cars and want to make more use of public transport and micro mobility.

There was also a marked openness to using shared mobility options including car sharing.

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