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Car rental firms face big revenue fall

Car-rental companies expect a fall of 10-15 per cent in revenue this year, marking their worst performance since the 1997 economic crisis when revenues plunged 30-40 per cent.

Published on December 5, 2007

Thai Car Rental Association (TCRA) adviser Nathee Vadta-nakovint said the industry had enjoyed strong growth for the past 10 years. There are currently 100,000 cars in the industry with asset value of about Bt100 billion.

The market has been dominated by 130 major companies besides several hundreds of small players mostly in tourist destinations.

Nathee said many government offices, state enterprises and private companies preferred to rent vehicles as a cost-effective measure.

The car-rental industry achieved growth of 13.5 per cent in 2006 with Bt10.5 billion in revenue.

"TCRA, however, expects revenue in the car-rental market this year to drop between 10 and 15 per cent," said Nathee, a former president of TCRA.

Nathee said the political situation had led to a decline in new investments by foreign businesses. It had also resulted in the decline in long-term car-rental contracts by newly established companies.

The unrest in the southern provinces had also affected inbound tourists, he added. This had definitely impacted car-rental services, which have seen a significant drop in demand for short-term and daily services.

He said the continuous rise in oil prices had also impacted the industry as Thais travelled less.

"We expect the industry to rebound and enjoy growth of between 10 and 15 per cent next year if the country gets a good government after the general election later this month," said Nathee.

He said TCRA would urge the new government to issue legislation regulating the car-rental industry to encourage fair and good service standards.

TCRA, which was set up eight years ago, currently has 24 members.

"TCRA was formed with the intention of promoting better cooperation among its members. The association has also encouraged all members to run their businesses in an ethical way," said Nopamas Chalakornkul, TCRA president.

Prasong Tangseepha, another TCRA adviser, said competition in the car-rental market had been tough this year amid aggressive pricing campaigns to attract customers.

He said prices for renting cars had dropped by between 10 and 15 per cent this year.

As an example, Prasong cited the fall in the monthly rental charge for the Toyota Altis, which had fallen from Bt22,000 to between Bt19,000 and Bt20,000 due to intense price competition.

 Kwanchai Rungfapaisarn

  The Nation


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