Rental car registrations up more than 25% in first half of 2022

Rental car registrations up more than 25% in first half of 2022

https://www.straitstimes.com/singapore/transport/rental-car-registrations-up-more-than-25-per-cent-in-first-half-of-2022

2022-09-26

SINGAPORE - A total of 4,337 new cars were registered for private hire in the first half of 2022, a 25.4 per cent increase from the same period in 2021.

With the total number of new car registrations in the same period down by 35.2 per cent from 25,678 to 16,640, new rental cars are taking up an increasing share of a markedly shrinking pie.

Industry observers say fleet-owning companies accounted for a sizeable share of the new rental cars, and in turn contributed to rising certificate of entitlement (COE) premiums.

Among the rental cars, registrations for those used to provide ride-hailing services - such as Grab and Gojek - rose by 8.4 per cent. Cars that are leased out for self-driving or car-sharing services jumped by more than 46 per cent.

The increase suggests that companies are expanding their fleets as they expect more people to rent cars to get around, rather than buy their own vehicles as rising COE premiums price consumers out of the car-buying market.

In the category for smaller and less powerful cars, COE premiums have increased by 45.8 per cent from $57,599 in the first tender exercise of 2022 to $84,000 last Wednesday.

Motor traders say demand for cars from private buyers has been poor since the later part of 2021, and that things have become worse as COE premiums hit record highs earlier this year.

The rental car sector seems to be picking up the slack.

Electric car-sharing firm BlueSG registered 109 new cars between January and August this year, adding to the 693 units it already had on the road at the end of 2021. The Straits Times reported last Friday that BlueSG will add up to 500 battery-powered Opel Corsa-e hatchbacks to its fleet over several months.

Even more ubiquitous than BlueSG's white cars are those from GetGo, which started operations in February 2021.

The car-sharing company has been growing quickly. From an initial fleet of 400 cars, its spokesman said it has 1,500 cars today.

None of these vehicles is owned by GetGo. Instead, over 10 different fleet owners supply cars to the platform.

Besides traditional car-leasing companies, there are outfits related to car distributorships that partner with GetGo to move their unsold stock.

While the population of such rental cars is growing - 24,442 in June 2022, compared with 21,897 in the same time last year - the opposite is true for the population of cars used to provide ride-hailing services. That number has fallen from its 2017 peak of 46,903 to 44,450 as at June.

Ride-hailing operators do not disclose their fleet utilisation rates, but it is likely that there are a sizeable number of cars that are not hired due to a shortage of drivers.

In a written parliamentary reply in August, Transport Minister S. Iswaran said the number of active taxi and private-hire drivers has fallen by 18 per cent in June 2022 compared with January 2020.

With rising used-car prices, fleet owners can fetch more by reselling unhired cars as used private cars than scrapping them prematurely or worse, leaving them idle.

Existing cars meant for rental or ride hailing can be converted to private cars for a fee, and vice versa.

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The private-hire car population was reduced by 1,489 units in the first half of 2022 through conversions. Cars meant for ride-hailing services accounted for the bulk of that cut, with a net reduction of 1,295 units.

Selling unhired cars also presents fleet owners with the opportunity to bring in newer and more fuel-efficient cars that drivers prefer. These new cars in turn command higher rental rates.

While the new registration data paints a promising picture for the private-hire car business as well as for car sharing, Singapore University of Social Sciences Associate Professor Walter Theseira said it is too early to say if this is the sign of a new norm, or if it is just businesses restoring what was lost earlier due to the Covid-19 pandemic.

For car sharing to really gain market share, he said taxi fares and ride-hailing rates have to rise significantly for this option to make sense to users.

Noting that Singapore's prices for point-to-point transport are significantly lower than those in global cities with similar levels of income and wages, he added: "It is only when hiring a driver is expensive that car sharing starts to look more attractive since you provide the driver yourself."

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