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South African Car Rental Industry
This report focuses on the South African car rental industry which grew revenue by 5% to R4.89bn in 2014. The members of the South African Vehicle Renting and Leasing Association (SAVRALA), who account for 90% of the sector, have a combined fleet of 63,000 vehicles and employ approximately 6,000 people.
Competition among the industry’s three main players, global brands Avis, Europcar and Budget, is intense and although in the past this resulted in low rental prices, analysts predict that rates will increase. Companies are under pressure from shareholders, who want a better return on investment, and operating costs have risen, due in part to the weakness of the Rand and the increase in interest rates. As one of the factors driving historical industry growth is the increase in tourism, there are concerns that the number of international tourists will decrease considerably because of the amended Immigration Act, which is applicable from 1 June 2015.
Locally and in the rest of Africa the shuttle and chauffeur drive side of the car rental industry is seeing particularly strong growth. Internationally, emerging trends such as car-sharing, car clubs and ride-sharing have had an effect on the car rental market, particularly in city areas, as they provide alternatives to traditional car rentals. Services such as Uber, FlightCar and Zipcar, which was acquired by the Avis Budget Group for US$500m in 2013, can be booked easily and quickly on the internet.
This report describes the current situation in the country, emerging trends within the industry and factors influencing the sector’s success. The report also profiles six of the major car rental companies, including Avis Rent A Car and Budget Rent A Car, subsidiaries of Barloworld South Africa (Pty) Ltd, a multinational company that operates in 24 countries and generates R62bn in annual revenue.