The car rental business expects to see the market drop 37.5 per cent to Bt10 billion this year, the first downturn in 11 years, hammered by the global economic crisis and the country's political unrest.
"The political situation has lowered investor confidence in business expansion and destroyed the tourism environment, softening demand for car rental services," Nathee Vadtanakovint, president of the Thai Car Rental Association, said yesterday.
The industry last year had Bt16 billion in rental receipts, he said.
This is the first time the industry has marked a drop in total car-rental value since the financial crisis of 1997, he added.
Corporate customers make up 60 per cent of the market, and their business is expected to fall 30 per cent.
Meanwhile car rentals for individual users, who account for the remaining 40 per cent of the market, should slide by 50 per cent.
The main customers in the corporate segment are foreign investors running their own businesses in Thailand. Most of them prefer long leases, while individual users normally drive away on a short-term contract.
Foreign investors, however, have suspended their project plans until the political situation returns to normal, Nathee said.
The slump in the tourism industry is worse for the car rental market than the oil-price hikes.
The falling trend in global oil prices is not favourable to the local car rental market either, because Thais like driving their own cars rather than rentals. Meanwhile, foreign tourists have abandoned plans to visit the country to avoid the political chaos.
Some of the 400 car rental operators have made the decision to close down operations. Nathee is hopeful the future US president, Barack Obama, will help revive the world economy, as that would help the Thai tourism industry overall, including the car rental business.
"About 80 per cent of the country's car rental customers are foreigners. If the global economic situation is better, the mood for travel and business expansion should be improving," he said.
The car rental prognosis for next year is anyone's guess. Revenue could rise or fall, as the protests show no signs of abating, he added.