The shortage of new cars globally as a result of the “semiconductor” crisis did not negatively affect the vehicle sales market, but rather extended to the leasing sector, where the scarcity of fleets of companies operating in this sector of new models for the years 2021 and 2022, which pervaded all types of vehicles in short supply with the high rental prices for new models.
The dilemma of the lack of supply, according to Al-Rai, has caused car rental companies, especially the big ones, to resort to various methods to maintain the confidence of their customers, so that the slowdown in their fleets does not affect their operations, as some of them have given priority to renting new models available to their large customers, especially when it comes to large deals, while companies resorted to satisfy their customers by giving them additional benefits and higher packages over the models of the past two years, which helps them maintain their confidence and meet their needs as much as possible.
While officials in rental companies confirm that some sector companies have raised rental prices by up to 10 percent as a result of the high cost of purchasing modern cars in light of the scarcity of their production globally, they point to other companies that reversed this by reducing their prices by rates ranging between 5 and 10 percent, as a result of intense competition in the market, with about 250 companies and rental offices, and in order to keep pace with the low prices offered by some offices, through which it was able to attract a class of customers despite providing them with fewer services.
Market people add another reason in addition to the lack of global production in the scarcity of new cars in the rental market, saying that the majority of cars available in the market today date back to 2019 and 2020, compared to a small percentage of 2021 models and very scarce of 2022 models, as a result of the global shortage on the one hand, and the repercussions of the Corona crisis on the other which made the sector companies wait for submitting new orders, pending the return of life to normal, and the regularity of the global shipping movement.
They confirm that the scarcity of new cars available to rental companies has led to many customers accepting to abandon some of the specifications they were asking for in their cars, with their conviction that the situation in the sector is exceptional and not optional, and that “goodness is from the existing” in the current period, waiting for the demise of the gray cloud from the market and the return of life to normal in all its aspects in the future.
In this context, Ehab Al-Awadi, director of the rental group at Al Mulla Car Rental and Car Rental Company, said that the car rental sector was affected by the decrease in the number of cars coming to the local market in recent months due to the crisis of the global “semiconductor” segments.
He pointed out that this matter led to an increase in rental values by about 10% in some companies, and added that car rental is divided into short-term and its duration ranges between one and 30 days, and long-term starts from a year, revealing that long-term leasing accounts for about 70 percent of the market today, and the majority of it belongs to ministries and various government agencies, as well as oil companies, and private sector companies that have various contracts in various sectors in the country.
Al-Awadi indicated that many companies are resorting to renting cars for their employees, as part of their strategic plans that they set to run their operational operations and achieve positive results, in order to save “cash” and to avoid problems that cars may encounter such as accidents or the need for maintenance and others noting that its resort to the rental option leads to a reduction in its operating expenses.
Al-Awadi stated that the repercussions of the “Corona” crisis and the reduction of some companies’ salaries to their employees affected the ability of their employees, which prompted many of them to resort to the option of leasing, which reflected positively on the sector, explaining that the Kuwaiti market witnesses the presence of about 250 companies and car rental offices, from among them, about 15 large companies capture the largest share of the market.
For his part, the Senior Director of Sales at Al-Sayer Car Rental, Bassem Hathat, explained that the car rental sector was greatly affected by the decline in new cars due to the lack of global production on the one hand, in addition to the high competition in light of the high number of companies, especially new ones in the market with dozens of companies entering the market during the last three years, in addition to the lack of new projects or delays in their start.
Hathat stated that rental companies in the local market are resorting to meeting the needs of customers, according to priority, the volume of bilateral transactions, work, the number of cars required and the specified time period, indicating that despite these factors, car rental prices have maintained their stability, or decreased by 5 to 10 percent as a result of to compete in the market.
The supervisor of the Individual Leasing Department at Automac, Mahmoud Abdel-Moati, said that many companies in the local market do not have a stock of 2021 models in their showrooms, which led to an increase in the prices available for some models, noting that the monthly rental prices start From 150 dinars for regular sedans and up to about 1,000 dinars for the available luxury models.