A dramatic drop in car rentals could lead to increased charges for tourists, reports the Irish Times. The total number of new cars been supplied to the rental market has fallen by 70% compared to the same period in 2008.
The car rental market was supplied with 4,272 new vehicles from January to May 2009, compared to 14,235 over the same period in 2008. As a percentage of the total car market, 10.09% of new cars registered have been supplied to the car rental market, compared to 12.17% in 2008. Nissan supplies the most vehicles to the sector, with 964 units or 22.6% of the market, ahead of VW with 11.5% and Ford with 9.3%. This means that 26% of Nissan’s new car sales are supplied to the car rental market. Further down the list, 56% of Chevrolet’s registrations are supplied to the car rental market…
“We highlighted the problem to the various ministers last year,” said Alan Nolan, director general of SIMI. “Dealers put cars on hire drives and the values they bought them at were not matched by the sales, because of the destabilisation of used car values following the tax changes and the downturn in the market. With the volatility of the used car market it has been difficult for dealers as when these cars come back they were selling them at a loss. With that situation, who in the current climate was going to take the risk on putting on rental vehicles? The way it worked in the past doesn’t work any more…”
Many companies are using 2008 – and in some cases 2007 – vehicles on their fleet, but these vehicles aren’t subject to any allowances and as they age are likely to incur more costs to the firms so it is often cheaper to use new models rather than used models as they got a VRT subvention for this.
For the dealer, often there is no benefit in putting a used model onto the rental car fleet. “If there is shortage of cars and there is a much smaller number of hire drive contracts being drawn up, it seems likely that there will be an increase in price for tourists, unless the number of tourists drop by the same degree,” says Nolan.
Total car hire registrations Jan-May 2009: 4,272
Total car hire registrations Jan-May 2008: 14, 235
Irish Times
