International and local travel remains a silver lining for car rental in SA
Johannesburg, 12 May 2015 – “In the current economic climate, the car rental industry in South Africa remains under pressure,” claims Lance Smith, Executive of Sales at Avis Budget Southern Africa. “Last year, there was no growth in the overall fleet size and rental days, however, local and international leisure has bucked this trend.”
To properly understand car rental in South Africa, one has to dig deeper into its segmentation. There are four main segments in the market, namely:
• Corporate/Government - 30% of the market
• Foreign inbound - 24% of the market
• Leisure - 26.5% of the market
• Insurance replacement - 19.5% of the market
The largest segment, Corporate/Government, is down 5.5% year-on-year, which reflects the weak economy, with the insurance replacement market down 12.6% due to 2014’s hail storms in Gauteng. Yet foreign and domestic leisure continues to provide an air of positivity with every province experiencing growth in this segment. Smith’s figures indicate that local and international leisure has grown at 9.5% and 10.8% respectively.
“It is pleasing to see the length of rental increase year-on-year in both foreign inbound and local tourism. This means more people, both local and international, are taking longer stays in this beautiful part of the world,” says Smith.
Province by province, one in two international rentals take place in the Western Cape, but what is pleasing is the growth in all provinces:
• Gauteng/Northern Province/ Limpopo/ Mpumalanga +6.8%
• Eastern Cape +11.9%
• KwaZulu Natal +6.8%
• Western Cape +15.1%
• Free State +25.5%
In terms of local tourism, car rental has also seen growth throughout South Africa:
• Gauteng/Northern Province/ Mpumalanga +5.1%
• Eastern Cape +18.6
• KwaZulu Natal +9%
• Western Cape +12.2%
• Free State +10.6%
The next year will hold a number of challenges in the business segments of the industry but it is envisaged that the leisure segments will continue to grow. With a total fleet size of around 65,000 vehicles, the industry will continue to try and balance cost pressures resulting from a weak Rand with the price increases needed.