I guess it depends on what you consider "incredibly" expensive. Usually, renting by the week will save you a considerable amount of money, but if you're travelling during the high season, don't expect many deals. The firm I use in Spain, carjet.co.uk, is a broker that covers a number of firms. It's showing the lowest weekly rental from Madrid (manual) at about $450 CAD, and the lowest automatic at $1000. You may be able to put in a request with the actual rental firm once you book, but there are usually no guarantees. I got an auto last fall even though I hadn't booked one. Rates aren't any lower for nearby places like Zaragoza, Bilbao, or Vitoria.
You might also want to keep an eye on the "excess value," the residual vehicle value, or deductible, that you are responsible for in the event of an accident. It usually ranged between about 550 and 800 Euro. You can purchase extra insurance to bring that deductible down to zero. Driving from Madrid to La Rioja is easy, with motorways in place most of the way.
If you're still looking for a place to stay during your wine route trip, check out the Hotel Villa de Abalos in the village of Abalos. It's an old mansion turned into a magnificent B and B....Jose Luis and his young family will take great care of you. It's a tiny village and, sitting in the town's only coffee shop for a couple of hours will let you see the entire crew of bodega workers traipse through.
If you plan to bring some wine back, buy it there...it's cheaper in La Rioja than outside. And check for Azpilicueta, the finest red Rioja I have ever tasted....unfortunately, not available here in Ontario.
Finally, on a more prosaic note, yes, an IDP is required for Spain, to go along with your regular driver's license.
