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Weak rand causes car rental increases

Source: Tourism Update, 29/02/2016

The weakening will result in higher rental rates, but the industry is
anticipating an increase in car rentals from the international market.

The weak rand is expected to result in in higher car rental rates,
members of the industry have warned.

Commenting on the latest Tourism Business Index released by the
Tourism Business Council of South Africa (TBCSA) last week, Marc
Corcoran, President of the Southern African Vehicle Rental and Leasing
Association (SAVRALA) said that although overall performance of the
industry was good over the holiday period, the industry will face a
difficult operating climate in 2016 as the depreciation of the rand
will impact on new vehicle pricing, which is .

Deon Ragunath, GM: Operations at Hertz Rent a Car and Martin Lydall,
Chief Commercial Officer at Europcar South Africa, said the current
rand/US dollar exchange rate has resulted in a vehicle price and
interest rate increase.

Lydall said that while the increase of Europcar`s rental costs will
depend on contracts and forecasted demand growth, the car rental
company is expecting an average of 10% increase to be implemented
across the board.

"General economic pressures have had an increasingly negative impact
on cost and rising operational and accident costs have increased the
cost base dramatically. The depreciation of the rand has added up to
20% to our cost base," said Lydall.

In spite of the price hike, both Europcar and Hertz are anticipating
to see an increase in car rentals from the international market due to
the weak rand.

Ragunath said that Hertz has noted an increase in demand for car
rentals from the international leisure market and has experienced
double digit growth in 2015 compared to 2014.

However, Lydall said Europcar did not notice any major increase in
demand from the international leisure market, but expects to see
double digit growth within 2016 aided by the relaxation of visa
regulations, the recovering US economy and persistent low oil prices.

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