Car rental pays in the long run

PUBLISHED : Friday, 10 September, 2010, 12:00am
UPDATED : Friday, 10 September, 2010, 12:00am

The car rental business in Hong Kong may be hampered by the absence of inbound tourists on fly-drive packages, but there is still consistent demand to meet the needs of other types of clients.

As Rebecca Hawkins, general manager of Hawk Rent A Car (HK), explains, the local market broadly divides into three parts. There are short-term hires usually for new arrivals, returning residents, or people whose own car may be in for repair. There are also long-term leases, in most cases arranged by employers for senior executives whose remuneration package includes a vehicle. And there is steady demand for chauffeur-driven limousine services for airport transfers, cross-border runs, or just that special night out.

'Actually renting a car is very straightforward,' says Hawkins, whose company has a fleet of more than 100 vehicles in Hong Kong. 'You can select from the standard groups used in the industry - economy cars, standard saloons, SUVs and luxury cars - and customers don't normally ask for a model, but send an inquiry based on the group and engine capacity.'

Indicative rates for a short-term, self-drive rental of a four-door executive sedan start from HK$630 per day or HK$3,150 per week. Terms include road tax, insurance and unlimited kilometres. Companies publicise standard rates on their websites and are open to negotiating special deals for longer periods.

'Generally, the longer you keep the car, the cheaper it is,' Hawkins says. 'So it works out much less if you rent for a month, rather than week by week.'

She emphasises the importance of regular servicing and maintenance, which are the basis for reputation and reliability. For her company, that means sending all cars for a seven-hour turnaround check before they go out to the next customer. In addition, corporate policy requires that all vehicles are purchased new from authorised local agents, so that there is no risk of involvement with parallel imports or second-hand vehicles with possible defects.

'We have to be vigilant,' Hawkins says. 'One of the most important things is to know the requirements of our insurance provider and comply with them. We need to protect their interests and our own.'

Logically, insurance-related factors also determine who can rent or lease. Hawk's basic terms and conditions stipulate that individuals must be over 26 years old with a valid driving licence unendorsed for at least two years. The company prefers to err on the side of caution if there is any reason to doubt the credentials presented.

Recognising the natural limitations on short-term rental business in Hong Kong, Hawkins expects most future growth to come from long-term leasing. Much depends, of course, on the ebb and flow of the economy. However, employers increasingly see the advantages of keeping assets, such as cars for expatriates, off their balance sheets, while having them easily available under flexible arrangements.

'This is the bulk of our business,' Hawkins says. 'People now see the benefits of leasing a car versus outright purchase. Long-term leasing is up and down with the economy, but if multinationals give executives the heave-ho, they are not burdened with the problem of what to do with the car.'