By Mohammed Shoeb
A large footprint and multifarious operators including dubious ones make it hard to assess the exact size of the car rental business in the country.
That there are companies with more than seven branches in different parts of the country, each with a fleet of over 2000 vehicles, however, can help one gauge its size with some help.
With the announcement of mega infrastructure projects related to the hosting of the 2022 FIFA World Cup, these car rental companies have expansion plans for tapping opportunities by the end of 2013 or from the first quarter of 2014. However, such prospects are not without challenges.
Asked why operators prefer corporate customers, a senior official of an American car rental company, speaking on condition of anonymity, said: “Serving individual customers for shorter periods not only requires big staff it is also a big headache. We have a list of niche clientele to whom we provide cars and other vehicles on lease usually for three to five years. This is a relatively hassle-free business. Only about 10 percent of the business comes from retail customers.”
Detailing expansion plans, the official said: “We had over 2,000 cars. But frankly, we have reduced operations by nearly 30 percent due to slowdown in business in the last couple of years.” He sees rise in demand from the second quarter of 2014. “If we have orders, we will definitely expand our fleet.”
Then there are other challenges, says Al Muftah’s Usman.
“If a vehicle meets with an accident, there are delays in getting the paper work done. As a result, the vehicle remains idle and we lose revenue,” said Usman.
Besides delays in police clearance and insurance companies, appointments with garages — especially those dealing in Japanese brands — also take a lot of time.
“We being fleet customers, get some priority but there are constraints that need to be addressed,” he added.
Delays in online updates of traffic violations is another issue car rental companies have to face. If the violation is reported after the dues with the customer have been settled, the operator is liable to pay the fine.
“There have been instances when we have learnt about traffic violations after the customer has left the country or when have gone for renewal of the road permit,” he said.
Giving an example, the senior executive of the American company, said: “In Dubai, there is a mechanism by which the car rental companies instantly come to know of a traffic violation. Perhaps it works with the help of satellite technology. If the same mechanism is adopted here, it can be of great help for car rental companies.”
At times, spare parts are hard to come by. If a vehicle needs immediate repairs, rental companies are forced to source them from neighbouring countries at higher costs.
For want of parking space, most companies use common parking areas. This makes it hard for motorists to find parking space. Many firms have their fleet parked far from their office. However, bigger names in the business have got around this problem with large designated parking zones.
“We don’t have any parking problem. Most vehicles remain with customers. And we have enough parking space for those which are idle,” said an official of a company on D-Ring Road.
Spare parts also bother this firm. “We have luxury buses running in Ras Laffan. We cannot wait for Mannai or Jaidah (vehicle dealers) to bring spares in two or three weeks to fix the problem. So we go to Dubai and get the spares sooner.”
Recently, the demand for chauffeur-driven cars has shot up. Visitors from neighbouring countries on a short visit here are not usually aware of the road layout. They do not prefer driving. Some operators have chauffeur driven cars and limousine services for such customers.
“We also have a licence for limousine services. Currently we provide high-end cars with drivers. But soon we will enter into this business in a more professional way with more sophisticated brands,” said Usman.
There are customers from Dubai taking early morning flights to Doha. Such clients, said Usman, fly back the same evening. “They do not have time to figure out the way to places they want to reach. They send an online itinerary to book our services. In this way, they save time and get hassle-free service.”
Generally, companies try to negotiate with customers. Apart from time duration, brand and model of a vehicle, there are other factors that determine the price.
The rental ranges from QR2,200 to QR9,000 per month for a car. A land cruiser with a driver can be hired at QR800 for eight hours. For a luxury bus, the rental may go up to QR18, 000 per month.
Rental companies generally prefer customers with a driver’s licence from Qatar. Traffic rules say that expatriates with licence from other GCC countries can drive here only for up to seven days. Those with an international driver’s license can drive in the country for up to three months. Customers with Indian, Pakistani, Sri Lankan and Bangladeshi licences are not allowed to hire vehicles.
Some companies do not rent-out super luxury cars without chauffeurs. “Cars above the Mercedes E-Class range are not rent out without chaffeurs,” said Usman.
Are persons wanting to hire for short periods denied vehicles? “So long as we get the proper papers —a residence permit, driver’s licence and credit card with sufficient balance to block QR1000, the duration is not an issue,” added Usman.
According to him, rental firms have taken up the issue of traffic violation with the authorities. “Last year, there was a meeting of all major car rental companies at Oryx Rotana and we have requested the Traffic Department to provide a dedicated window for us, but the problems remain to be addressed.”
According to law, car rental companies are not supposed to keep a fleet older than five years. This is to ensure that customers get vehicles in good condition. However, the business says that there is no basis for such a rule.
“Every year a vehicle goes for technical inspection before the road permit is renewed. I believe that so long the car is in a good condition, its age is immaterial. Therefore, it should be allowed to be driven like in case of individual car owners,” said another official requesting not to names. “Don’t we have cars on the road that are over 30 years old?”
But will operators offer lower rates if allowed to rent out vehicles more than five years old? “No, it’s not possible. Such cars need more maintenance, leading to higher operating costs. It can be beneficial only if the vehicle is on a long lease.”
Though customers complain of the high cost of hiring and inadequate supply of vehicles, small and marginal companies have a different story.
“There was a time when we were earning about QR500-QR600 on each car every month. Today, the car rental business is no longer a lucrative one due to competition. At times, we rent out a car and make a profit of just QR100,” said an operator, wishing not to be named. He owns over 70 vehicles.
He rued tariffs have not kept pace with the prices of cars, rents of commercial and residential units, staff salaries and the general cost of living.
“I am in the business for 15 years. But everything has changed so dramatically. The prices of cars have nearly doubled, but the rentals have not increased at the same pace. For instance, when the price of a Honda Civic car was QR40, 000, we used to rent it out at QR1,800 per month, but now when the price of the same car is QR70, 000, we are renting it out at QR2,300 to QR2,400. The profit has come down from QR600 to QR100 to 150 per month.”
There are small operators, he said, running business from their homes with five to 10 cars. As they do not have to hire offices and give salaries, the can provide cars at cheaper rates. In addition, there are some who even rent out personal vehicles to their acquaintances; illegal taxi drivers are the main customers of such unorganised car rental operators.
But does he also experience delays in police clearance? He does not agree. “The police clearance has become very fast. At times we get it in 10 minutes.”
However, he was one with other rental firms on the issue of getting spare parts. “Most often it becomes very difficult to find original spare parts. Even if we order them from outside, six out of 10 items will be delivered and the rest have to be sourced from here and there.”
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