Car rental in South Africa is on an upward trajectory, but the resumption of reliable, affordable flights is essential to regain the highs achieved prior to the COVID-19 pandemic.
This is the message from Savrala GM, Sandile Ntseoane, who describes the biggest challenge for the sector at the moment as the high price of airline tickets and the cost of getting people to destinations. “If no one arrives at the airport, no one rents a car and no one checks in to a hotel or visits a restaurant.”
In terms of volume, the car-rental industry has recovered to about 80%-85% of pre-COVID levels, he says. “From a revenue perspective, however, we are at pre-COVID levels due to more realistic rental pricing and price increases over the last three years. The pandemic has shown us that we could not survive on the cut-throat pricing we had pre-COVID. Although rental prices are still lower than the rest of the world, we are more aligned.”
Ongoing setbacks – such as the war in Ukraine and the Toyota factory flooding in Durban (both resulting in vehicle supply delays), the grounding of Comair and China’s COVID-19 lockdown – have hampered full recovery, he adds.
“The industry has also been particularly impacted by the cost of logistics and fleet relocation due to the fuel price increase and these costs can no longer be absorbed by the industry. We expect the continued volatility of vehicle supply to continue for a further 12 to 18 months, which will create supply constraints, so planning by travellers remains imperative. Whilst the issue of vehicle shortages is set to continue for a while, once it recovers this will bring better service,” he believes.
Ntseoane feels that the online check-in features that most car-rental businesses are using – as well as increased adoption of technology – will continue to simplify the vehicle rental process.
Investment in technology
“Fortunately,” says First Car Rental/SIXT Rent a Car Executive Head: Strategy, Development and Marketing, Melissa Nortje, “we have always invested in our technology strategy, which has served us well before, during and now living with COVID-19 to allow machines to do the mundane and the more complicated, leaving us to employ the right people for everything in between.”
She adds: “We launched our Quick Checkout platform at the end of 2018, which has allowed us to retain staff and customers due to the modern touchscreen approach and paperless process. We extended this approach during lockdown in 2020 to delivery tablets as well. I truly believe we have the best car-rental customer experience available in the car-rental industry today.”
On March 26, 2020, as South Africans prepared for the first COVID-19 lockdown, Nortje remembers how the team braced themselves for a storm that they knew wouldn’t last for three weeks. “Our daily Exco meetings always looked to various plans to weather an 18-month storm and our strategy was: what do we want our company to look like when this is over?”
She concludes: “It has been two of the hardest years in our existence, but all our efforts are starting to pay off. When compared with 2019 figures, we have increased our fleet by 23% and our revenue by almost 29% YTD. We run a much tighter ship, with a major focus on our utilisation.”
