New Zealand Faces Higher Rental Car Prices Amid Vehicle Shortage

(Bloomberg) -- New Zealand will experience higher prices for rental cars over the next two years amid a shortage of vehicles as operators rebuild their fleets, according to local hire firm Jucy.

The country's rental car inventory is about 30-40% of pre-pandemic figures as a result of some businesses closing and others selling off unwanted vehicles, Jucy said in an emailed statement Wednesday in Wellington. A global shortage of new cars will add to the challenge.

“Replenishing this fleet will take us at least two years and in the interim we can expect prices to rise,” Chief Executive Officer Dan Alpe said. In Australia, average daily car hire rates have increased 95%, he said.

New Zealand's tourism sector was particularly hard hit when borders slammed shut over two years ago, with businesses like Jucy losing almost all their revenue overnight. The country is now preparing to welcome foreign visitors, starting with Australians next week, prompting businesses to look forward to a gradual recovery.

Alpe expects strong demand for self-drive tourism in New Zealand's South Island coinciding with the upcoming Australian school holidays. An influx of working holiday visitors is likely among the early arrivals, with higher volumes of Northern Hemisphere travelers expected from October onwards, he said.

One lesson from the reopening of the border in Australia was that the market responded much quicker than expected, and Jucy has taken that learning on board and begun to scale up its New Zealand call center already. Still, it could be nervous times for some businesses.

“Tourism operators around the country will be taking a leap of faith at the moment,” Alpe said. “Investing in staffing and equipment resources at a time where their cashflow has been strained to the limit -- the challenge at this point is that the revenue won't hit their accounts until the visitors arrive.”