Automotive equipment rentals and leasing, 2023

Strong growth leads to record-high operating revenue and profit margin for automotive equipment rental and leasing in 2023

The operating revenue of the automotive equipment rental and leasing industry group increased by 14.0% in 2023 to $9.8 billion, reaching 23.5% above the level observed in 2019, before the COVID-19 pandemic. This industry group includes establishments primarily engaged in renting or leasing vehicles, such as passenger cars, passenger vans, trucks, truck tractors, buses, semi-trailers, utility trailers and recreational vehicles, without drivers.

In 2023, the price index for the rental of passenger vehicles edged up 1.1% over 2022, which comes after sharp increases in recent years, resulting in a 46.7% increase in the price index since 2019.

Operating expenses for the industry group increased by 13.9% to $8.1 billion in 2023. Amortization and depreciation were the largest expenses in 2023, accounting for over one-quarter (27.1%) of operating expenses.

The cost of goods sold accounted for 20.2% of operating expenses, while salaries, wages, commissions and benefits represented 15.3% of operating expenses. This figure is down from 2019, when salaries, wages, commissions and benefits accounted for 17.0% of total operating expenses.

The total level of employment in this industry group rose 6.4% in 2023, compared with 2022. Despite this increase, the level was 14.5% below that seen in 2019. This was the driving factor behind salaries, wages, commissions and benefits falling as a percentage of total expenses.

The operating profit margin edged up from 17.7% in 2022 to 17.8% in 2023. This continues a trend of strong operating profits, compared with the margin from 2019 (12.5%). The supply shortage related to passenger vehicles has played a notable role in the increasing profitability of this industry group since 2019. More recently, the supply shortage has eased somewhat, resulting in prices and profitability becoming more stable.

In 2023, 55.7% of sales across the industry group were to businesses, while 41.2% were to individuals and households. The proportion of sales outside Canada was 1.7%, and sales to governments accounted for 1.5%.

E-commerce rose slightly as a percentage of total sales to 39.6% in 2023, up from 39.4% in 2022.

Looking ahead

The primary issue affecting the industry group for the last few years has been the supply shortage of cars, driven by strong demand following the lifting of the pandemic restrictions. While these pressures are easing, they persisted through 2024. From January to October 2024, the number of new vehicles sold was 5.8% lower than in the same 10-month period of 2019. Meanwhile, tourism demand for rental vehicles rose by 13.5% in the first half of 2024, compared with the same period in 2023.

Detailed financial statistics on the automotive equipment rental and leasing industry group for 2024 will be available after survey data collection in 2025. These data will provide more information on the effects of the shifting trends the industry group is facing.