Four Wheels Good

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It’s a staple of corporate travel, yet it’s a tough business to be in, with most of the competing brands having to resort to competing on price. Richard Holmes takes a look at this and other current trends in the African car rental industry.

In the rush of booking air tickets, rustling up foreign exchange, navigating the bureaucratic web of visa applications – all the while trying to make a business trip worth the spend – arranging your car hire is something often left to the last-minute. And while in some of Africa’s more developed economies it may well be possible to arrive at an international airport and find a car available, it most certainly pays to plan ahead. Particularly when you’re travelling abroad, time truly is money and you can’t afford to waste a single naira, rand or shilling.

Happily for corporate travellers, the past few years of softening demand have forced car rental companies across the continent to limit rate increases and work harder than ever for your business. Rises in rental rates – if they’ve increased at all – have barely touched inflation, and technological leaps and bounds have meant you get far more for your buck than even five years ago. Right now, for corporate travellers needing to get from A to B, it’s a buyer’s market, say industry experts.

“The car rental market is very competitive from a price perspective,” says Keith Rankin, Chief Executive of Avis Rent a Car Southern Africa. “Average rate increases have been below inflationary increases.”

Dawn Nathan-Jones, CEO of Europcar, agrees: “Rates favour the consumer and have remained fairly static with minimal increases in some areas.” “In the past 12 months, transactions have remained flat, with that trend changing at the end of the year – demand has steadily improved over the past three months,” notes Mellindree Narayanasami, Marketing & Commercial Director for South Africa-based Tempest Car Hire. “From a pricing perspective, this has been stable, although minimal price increases have been implemented because of the flat growth in transactions.”

“Our corporate base in Southern Africa has grown in the last year and corporate rates have stabilised, although rate is still very important to the corporate traveller,” agrees Lindsay Versfeld, Marketing & Partnership Manager for Budget Rent a Car South Africa, Namibia, Botswana. “Safety in vehicles has definitely increased as a corporate need, and therefore we have moved to gear up our fleet accordingly, ensuring that the majority of our fleet has ABS and airbags.”

Safety features are becoming ever more important, and while vehicle preferences rarely change from country to country, “most requests revolve around safety issues or specific product requests, for example, German companies requesting German-manufactured vehicles,” notes Susan Marshall, National Marketing Manager for Hertz Southern Africa.

“Over the last two years, Europcar has noticed that safety is what consumers are concerned with,” agrees Nathan-Jones. “They’d rather pay more for a car with more safety features than save money. Small to medium economy vehicles are the most popular choices, and what makes these choices more sensible is that the vast majority of our fleet includes ABS and airbags as standard.”

It’s a salient point that is worth repeating. As safety features become more widely available across all car hire brackets, so there has been a subtle trend of corporate renters downgrading their vehicle category. Except for impressing clients, why hire a high-end sedan at three times the price, when an entry-level coupé offers just as many bells and whistles. Although, to be fair, it’s downgrading in name only, as improved features on even entry-level vehicles ensure that Anti-Lock Braking Systems (ABS) and airbags now come standard, explains Marshall: “Yes, companies have downgraded the categories, but this is two-fold: cost and also that the smaller vehicles now have safety features and extras they never used to – airbags, ABS, blue tooth. Hertz’s entire fleet from entry level is air-conditioned.”

Destination also often comes into play with regard to vehicle type, as challenging road conditions in certain African regions tempt corporate travellers towards larger vehicles. “In southern Africa, excluding South Africa, there is a higher demand for 4×4 vehicles due to road conditions and safety concerns,” notes Rankin, who says this is particularly true of Namibia – the largest car rental market in southern Africa, excluding South Africa – and Mozambique, which “ is growing, but from a small base, due to the resources boom in that country.”

A further trend, albeit one that has been slow to take off, is the awareness – if not yet revving demand – of eco-friendly vehicles. The likes of the Toyota Prius have made the world increasingly aware of the possibilities of hybrid vehicles, and they are slowly but surely making in-roads into the wider rental market. “We have had hybrid vehicles on our fleet for the last three years,” says Rankin.  “Demand is still very low as these vehicles are more expensive and most customers are not prepared to pay a premium for them. However, demand will increase as the cost of ownership reduces.”

“Due to the cost of this vehicle type, we don’t foresee increased demand in the near future,” adds Nathan-Jones. “We do however see more elevated demand for fuel-efficient vehicles and many of the manufacturers are heeding that call. The VW Polo Blue-Motion, now on fleet, fares very well against its closest hybrid counterpart in carbon emissions.”

While fuel-efficiency taps right into the bottom-line of your business trip, eco-credentials and carbon credits are also becoming a factor in the decision around hiring. That’s because “more South African corporate companies are asking for greener solutions on car rental, and this trend will continue,” says Narayanasami. “Car rental companies now report on carbon emissions and there is a continued request for green policies on proposals.”

For instance, both Avis and Europcar declare the carbon emissions for the rental period on the invoice. And from a continent-wide perspective, eco-friendly options are certainly an important consideration, says UK-based Regional Director: Africa & Indian Ocean for Avis, Thierry Domballe: “Customers are showing an enhanced eco-friendly attitude, and we offer the latest range of vehicles that provide fuel efficiency, comfort, and performance to suit all those needs. Hybrid vehicles are offered in some countries, and are definitely part of our focus, with regard to fleet development.”

That’s an important word: “fleet”. For in addition to cost issues, availability is a further hindrance to hybrid vehicles making greater in-roads to the rental market. Even in the mature market of South Africa, only a handful of companies offer hybrid vehicles, and fewer still have them available in the three major metropolitan areas. It’s hard to be green when there’s no hybrid in town. One thing’s for sure though. Whether you’re most concerned with what comes out the tailpipe, or what flows out of your travel budget, in the face of flat demand, the car rental industry across Africa is welcoming corporate travellers with open arms.

TALK THE TALK

 Before you sign that hire agreement, make sure you know what all those acronyms and terms are about:

Additional drivers

Hire agreements usually allow for one named driver. If people other than the contract signatory are to drive the vehicle, they must be added as “additional drivers’ at the time of hiring. There is usually a surcharge for this.

Airport surcharge

Collecting your car from an international airport? Don’t be surprised if you’re billed for an airport surcharge.

Collision Damage Waiver (CDW)

This is an important one. The CDW is a form of insurance that reduces your liability for any damage that is caused to the rental vehicle in the event of a collision, accident, or theft. The waiver sometimes excludes any damage to windows and tyres. Spending extra on a ‘Super Waiver’ often reduces or eliminates any financial liability in the event of damage or loss of the vehicle.

Energy Recovery Fee (ERF)

Some companies, such as Budget, levy an ERF to recover the escalating energy costs related to business operations. The fee will be clearly stated, and is charged to all customers at all locations.

International Driving Licence

An International Driver’s Licence – easily available from the Automobile Association – is required by many car rental agencies to allow you to hire a vehicle outside of the country where you obtained your licence.

Mileage

Basic car hire contracts usually stipulate a limited number of kilometres that may be driven per rental day. Any mileage over this allotted amount will be charged for… often at hefty rates. If you plan on covering long distances, ensure your rate allows for unlimited mileage.

Master Rental Agreement (MRA)

A rather grand term for the contract you will sign with the car hire agency, outlining the details of the rental, as well as your rights and liabilities.

Personal Accident Insurance (PAI)

This optional insurance offering provides cover for both you and your passengers in respect of accidental death and medical costs during the period of rental. Like the ‘Super Waiver’, it’s usually an added extra to the hire contract.

 LOYALTY SCHEMES

 Although not as pervasive as the airline industry, loyalty programmes are proving increasingly important for car rental agencies eager to ensure that you always head for the green, yellow or blue desk when you need wheels. Whether it’s free hires, additional days or complimentary upgrades, the array of benefits makes joining one of the loyalty programmes a no-brainer, but first look at why you’re joining and which agency partners with which brands. Although a revamp of the programme is planned for 2013, Hertz currently has no loyalty partners, and simply offers free rental days and upgrades to repeat customers. Avis, on the other hand, is more complex and partners with financial services (American Express and eBucks) and airlines (both British Airways Executive Club and South African Airways Voyager).

Budget is partnered with the global Hilton HHonours programme, offering both loyalty points and discounted rates, while Europcar’s new offering – Privilege Club – offers members discounts on leisure hires, as well as discounts at Accor hotel brands. What’s more, being a member of a loyalty programme opens the door to slick and efficient rentals, so you can arrive and collect your keys with a minimum of fuss by signing one ‘Master Rental Agreement’ that applies every time you hire.

 DON’T WANT TO DRIVE?

 In some cities and countries, collecting a hire car from the airport and navigating your way into the city centre – or, worse, a far-flung country town – can be downright terrifying. Luckily, the major car rental brands have created a host of ‘chauffeur drive’ products that allow you to sit in the back seat and concentrate on getting down to business:

Hertz: The ‘Chauffeur Drive’ service is offered in major cities, with rates including the professional driver, a meet-and-greet service, passenger insurance cover (excluding personal property) and fuel. Chauffeurs can also be arranged for longer trips, but rates will then exclude the chauffeur’s accommodation and meals.

Avis: Available 24 hours a day, Avis ‘Point 2 Point’ chauffeurs are carefully vetted (and undergo an advanced driving programme) and meet passengers at the arrival gate to usher them through the airport. As with similar products, charges are calculated per zone and are available in Economy, Sedan and MPV categories. The Point-2-Point service is only available in major cities, but transfers in other areas can often be facilitated through the central reservations desk.

Europcar: Europcar’s extensive chauffeur services are available in a host of African countries, including Cameroon, Djibouti, Egypt, Guinea, Madagascar and Nigeria. Options range from simple A-to-B transfers through to daily ‘car-and-driver’ services. For top-level executives, a VIP chauffeur service is also available.

Budget: Offers both door-to-door transfers as well as chauffeur services for longer rental periods. Chauffeurs are assigned exclusively to you and the vehicle during the rental, so they’ll deliver you at your destination and wait until the deal is done. Note that 24 hours lead-time is required for chauffeur and transfer services.

Tempest: Travellers – and even savvy locals – flying into Johannesburg, Cape Town and Durban international airports, can take advantage of Tempest’s airport transfer service, which is ideal for late-night or early-morning arrivals. Rates (from $30) are calculated on distance per vehicle, which usually accommodates up to three passengers, so it’s especially affordable if travelling with colleagues. ‘Flexi Services’ are also available for longer transfer periods.

 

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