Sudden demand in car rentals surprises market
January 21, 2010
By Roy Cokayne
A spike in demand has resulted in major car rental companies running out of vehicles this week, particularly in the greater Johannesburg area.
Rental companies have attributed this to improved business sentiment and excitement in the corporate market about improved business prospects for this year.
Many car rental companies are planning to bring forward new vehicle purchases, which should provide a welcome boost to the market.
George Corbett, the operations director of EuropCar, said yesterday the company had 95 percent utilisation this week of 700 cars it had available for rental in Johannesburg.
He attributed the increased demand to improved business sentiment and people going on business trips at the beginning of the year earlier than normal.
"We're scratching our heads to pinpoint the reason for the avalanche of demand, but also smiling," he said. "Demand has been particularly strong out of the airports and most rentals have been booked by travel agents. We believe it is corporate and not leisure demand."
Brand Pretorius, the chief executive of McCarthy, which includes Budget Rent A Car, said the spike in demand this week "came as a pleasant surprise, but is quite abnormal and the extent of the shortage quite significant".
He said a key reason for the unavailability of rental vehicles was the late delivery of vehicle purchases, but there was also a new level of energy, confidence and sense of excitement about what this year was going to deliver.
"Business people are generally a lot more hopeful," he said. The mood from the outset this year has been distinctly upbeat and corporate travel is running at a higher level."
Pretorius said high demand levels existed everywhere in the country, with the exception of Cape Town.
Pretorius said Budget Rent A Car's rental fleet ranged between 8 500 and 10 000 vehicles, with about 45 percent located in Johannesburg.
Pat O'Brien, the chief executive of Hertz South Africa, which is part of the automotive business of listed Steinhoff subsidiary Unitrans, said its rental vehicles were sold out this week, but believed this was normal because "everybody gets busy when people get back to work". He also said demand was strong throughout the country, with the exception of the Cape.
Avis Southern Africa, which is part of listed Barloworld, was unavailable for comment.
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