This year has seen a VAT increase and a rising fuel price, which makes purchasing and operating cars more expensive. What can we expect prices in the car rental industry to do?
Lance Smith, executive: sales for Avis Southern Africa, says these factors will lead to a rise in the price of car rental, which will impact the industry as a whole.
Martin Lydall, chief commercial officer of Europcar SA, explains: “The cost increases are real and the industry will have to recover some of these increases via price increases. We remain focused on our own cost efficiencies so that we are able to offer very competitive pricing.”
Further, he says increased prices result in fewer people being able to afford car rental, in which case they will seek alternatives and reduce usage. “We have already seen this in the form of a softening market in the first quarter and a significant shortening of rental length,” adds Martin.
Wils Raubenheuimer, ceo of Hertz Rent a Car Southern Africa and Firefly Car Rental South Africa, hopes there will be price increases ahead for car rental but believes it is unlikely. “The car-rental environment is extremely competitive, making it difficult to adjust or increase rates,” he explains. He agrees that the VAT and fuel price increases will impact the whole industry, adding that there has already been a decline in volumes compared with previous years.
Bidvest Car Rental operations executive, George Corbett, says the VAT increase has resulted in inclusive rates being adjusted accordingly, but adds that fuel remains a direct customer usage cost and, as such, does not affect the actual customer rate. “The consumer is very price sensitive and price does play a big role in the decision-making, whilst it is important that the service offering and rental experience are of the highest standard as a differentiator.”
