T

he global economic slowdown is having an impact on the car rental business as all companies are making efficiency cuts.

The impact is twofold in that existing customers have reduced the number of cars they rent while some companies are renting cars rather than buying new ones.

"While companies that used to own large fleets of cars for their operations are switching to renting for efficiency and effectiveness," said Pongki Pamungkas, chairman of the Indonesian Association of Car Rental Companies (Asperkindo).

In his opinion, there will still be growth in the car rental business, although it will not be as high as a few years ago. Most car rental companies have set a growth target of 10 percent this year.

He said that many companies tended to rent cars rather than buy new ones in order to avoid additional costs for service, maintenance, part replacement, insurance and registration.

"From the expenditure point of view this is more advantageous to a company as the fixed cost is easier to calculate and forecast for the entire contract duration," he said.

As service, repairs and maintenance are included in the rental price a company does not have to worry about additional, unpredictable costs.

As drivers are also provided there is also efficiency in the case of manpower and salaries.

Renting cars is also more convenient as a company can let the rental company take care of car registration, insurance and everything else. This way a company can concentrate on its core business.

"For a company, renting cars is also good for its return on investment as the funds can be used for more productive activities," explained Pongki.

He said that car rental was an outsourcing concept that could be of great help and convenience to a company as long as the rental company took care of everything.

Hence, car rental companies are measured based on their consistent service and commitment or service level before they are appointed as providers. Therefore, the rental price is not the only consideration to take into account but service as a whole.

"Car rental companies must be wise in determining their price range so that both parties benefit. They must also be selective in their customers," he said.

Pongki said that in the current economic situation rental companies must prioritize customer satisfaction that includes the best service and competitive prices. He also said that he was relieved that no Asperkindo members had gone bankrupt but appeared to be surviving the recession.

"Admittedly it is a difficult time for every industry, but we always maintain good relations and always have good communication with our customers so that there is a solution to every problem," said Pongki.

Rental duration, he said, varies according to the needs and characteristics of a company. The longest contract is usually for three years.

Since its establishment in 2008, Asperkindo has established nine branches and aims to have branches in 11 provinces by the end of this year. It has 120 car rental companies as members that include both small and large companies.

Meanwhile, TRAC-Astra Rent A Car operations manager Jefri R Sirait said the economic downturn had given many companies no choice but to cut down on spending in many fields as the price of new cars and maintenance costs kept going up.

However, he said, more new cars had to be made available for corporate directors and executives in relation to their company image.

"That is one of the reasons companies turn to outsourcing, which means they prefer renting cars. This is a normal choice under the current circumstances," said Jefri.

He said that if a company had 200 cars then it was similar to a taxi company, and if it was not a taxi or a car rental company then it would be more efficient for such a company to rent cars than to own that many.

To take care of such a large number of cars a company would have to form a special department to arrange registration, insurance, maintenance, service, repairs, workshop and drivers.

All this inconvenience can be avoided by using the services of a car rental company, which also provides replacement cars should a car break down.

That is why many companies use the services of a car rental company rather than purchase a large number of new cars. This way they can avoid all the above mentioned inconveniences. The only burden left is gasoline, parking fees and the like.

"Car prices keep going up. It is impossible that they will go down, so rather than spend your money on new cars it is better to rent them," said Jefri.

He said that although his company did not turn away customers who wanted to rent on a daily basis, which was less profitable, long-term contracts were more feasible. "To us the customer is king, so we must give the best service," he said, adding that replacement cars were mostly used for daily rentals.

Some of the major companies that are long-time TRAC customers are Sampoerna, Bentoel, Kaltim Prima Coal and a number of domestic banks.